Political Economy
by J.C.L. Simonde de Sismondi
1815
Chapter 1
Objects and Origins of the Science
Political economy is the name given to an important division
of the science of government. The object of government is, or
ought to be, the happiness of men, united in society; it seeks
the means of securing to them the highest degree of felicity
compatible with their nature, and at the same time of allowing
the greatest possible number of individuals to partake in that
felicity. But man is a complex bring; he experiences moral and
physical wants; therefore his happiness consists in his moral and
physical condition. The moral happiness of man, so far as it
depends on his government, is intimately connected with the
improvement of that government; it forms the object of civil
policy, which ought to diffuse the happy influence of liberty,
knowledge, virtue, and hope, over all classes of the community.
Civil policy should point out the means of giving to nations a
constitution, the liberty of which may elevate the souls of the
citizens; an education which may form their hearts to virtue and
open their minds to knowledge; a religion which may present to
them the hopes of another life, to compensate for the sufferings
of this. It should seek not what suits one man or one class of
men, but what may impart most happiness by imparting most worth
to all the men living under its laws.
The physical well-being of man, so far as it can be produced
by his government, is the object of Political Economy. All the
physical wants of man, for which he depends on his equals, are
satisfied by means of wealth. It is this which commands labour,
which purchases respectful service, which procures all that man
has accumulated for use or pleasure. By means of it health is
preserved, and life maintained; the wants of infancy and old age
are supplied; food, and clothing, and shelter, are placed within
the reach of all. Wealth may therefore be considered as
representing all that men can do for the physical well-being of
each other; and the science which shows to governments the true
system of administering national wealth is an important branch of
the science of national happiness.
Government is instituted for the advantage of all the Persons
subject to it; hence it ought to keep the advantage of them all
perpetually in view. And as in respect of civil policy it should
extend to every citizen the benefits of liberty, virtue, and
knowledge, so it ought likewise, in respect of political economy,
to watch over all the advantages of the national fortune.
Abstractly considered, the end of government is not to accumulate
wealth in the state, but to make every citizen participate in
those enjoyments of physical life which wealth represents.
Government is called to second the work of providence, to augment
the mass of felicity on earth and not to multiply the beings who
live under its laws, faster than it can multiply their chances of
happiness.
Wealth and population are not, indeed, absolute signs of
prosperity in a state; they are only so in relation to each
other. Wealth is a blessing when it spreads comfort over all
classes; population is an advantage when every man is sure of
gaining an honest subsistence by his labour. But a country may be
wretched, though some individuals in it are amassing colossal
fortunes; and if its population, like that of China, is always
superior to its means of subsistence; if it is contented with
living on the refuse of animals; if it is incessantly threatened
with famine, this numerous population, far from being an object
of envy, is a calamity.
The improvement of social order is generally advantageous to
the poor as well as to the rich; and political economy points out
the means of preserving this order by correction, but not of
overturning it. It was a beneficent decree of Providence, which
gave wants and sufferings to human nature; because out of these
it has formed the incitements, which are to awaken our activity,
and push us forward to develop our whole being. If we could
succeed in excluding pain from the world, we must also exclude
virtue; if we could banish want, we must also banish industry.
Hence it is not the equality of ranks, but happiness in all
ranks, which the legislator ought to have in view. It is not from
the division of property that he will procure this happiness, but
from labour and the reward of labour. It is by maintaining the
activity and hopes of the mind; by securing to the poor man as
well as to the rich, a regular subsistence and the sweets of
life, in the performance of his task.
The title given by Adam Smith to his immortal work, on the
science we are now engaged with, 'The Nature and Causes of the
Wealth of Nations' forms at the same the most precise definition
of that science. It presents a much more exact idea than the term
political economy, afterwards adopted. The latter designation, at
least, requires to be understood according to the modern
acceptation of the word economy, not according to its etymology.
In its present sense economy denotes the preservative,
administrative, and the management of property; and it is because
we use the somewhat tautological phrase domestic economy for the
management of a private fortune, that we have come to use the
phrase political economy for the management of the national
fortune.
From the time when men first entered into social union, they
must have occupied themselves with the common interests
originating in their wealth. From the beginning of societies, a
portion of the public wealth was set apart to provide for the
public wants. The levying and management of this national
revenue, which no longer pertained to each, became an essential
part in the science of statesmen. It is what we call finance.
Private fortunes, on the other hand, made the interests of
each citizen more complex; being exposed to the attacks of
cupidity and fraud, their wealth required to be defended by the
public authority, according to the fundamental article of the
social contract, which had combined the strength of individuals
to protect each with power of all. The rights over property, the
divisions of it, the means of transmitting it, became one of the
most important branches of civil jurisprudence; and the
application of justice to the distribution of national property,
formed an essential function of the legislator.
But no inquiry concerning the nature and causes of national
wealth had occupied the speculations of our ancestors. They had
not ascended to the principles of political economy, in order to
deduce from that source their systems of finance and civil
jurisprudence, which ought, however, to be nothing more than
corollaries from those principles. They had abandoned the
development of public wealth to the result of individual efforts,
without examining their nature; and thus property had accumulated
silently, in each society, by the labour of each artisan to
procure his own subsistence, and afterwards his own comforts -
before the manner of acquiring and preserving it became an object
of scientific speculation. The philosophers of antiquity were
engaged in proving to their disciples, that riches are useless
for happiness; not in pointing out to governments the laws by
which the increase of those riches may be favoured or retarded.
The attention of thinking men was at length directed to national
wealth by the requisitions of states, and the poverty of the
people. An important change which occurred in the general
politics of Europe, during the sixteenth century, almost every
where overturned public liberty; oppressed the smaller states;
destroyed the privileges of the towns and provinces; and
conferred the right to dispose of national fortunes on a small
number of sovereigns, absolutely unacquainted with the industry
by which wealth is accumulated or preserved. Before the reign of
Charles V, one half of Europe, lying under the feudal system, had
no liberty or knowledge, and no finance. But the other half,
which had already reached a high degree of prosperity, which was
daily increasing its agricultural riches, its manufactories, and
its trade, was governed by men who, in private life, had attended
to the study of economy, when, in acquiring their own property,
had learned what is suitable in that of states; and who,
governing free communities to which they were responsible, guided
their administrations, not according to their own ambition, but
according to the interest of all. Till the fifteenth century
wealth and credit were no where to be found in the republics of
Italy, and of the Hanseatic league; the imperial towns of
Germany; the free towns of Belgium and Spain, and perhaps also in
some towns in France and England, which happened to enjoy great
municipal privileges. The Magistrates of all those towns were men
constantly brought up in business, and without having brought
political economy to the form of a science, they had yet the
feeling as well as the experience of what would serve or injure
the interests of their fellow-citizens.
The dreadful wars which began with the nineteenth century,
and altogether overturned the balance of Europe, transferred a
nearly absolute monarchy to three or four all-powerful monarchs,
who shared among them the government of the civilized world.
Charles V united, under his dominion, all the counties which had
hitherto been celebrated for their industry and wealth, - Spain,
nearly all Italy, Flanders, and Germany; but he united after
having ruined them; and his administration, by suppressing all
their privileges, prevented the recovery of former opulence. The
most absolute kings can no more govern by themselves, than kings
whose authority is limited by laws. The former transmit their
power to ministers whom they themselves select, in place of
taking such as would be nominated by the popular confidence. But
they find them among a class of persons different from that in
which free governments find them. In the eyes of an absolute
king, the first quality of a statesman is his being in possession
of a rank so high that he may have lived in noble indolence, or
at least in absolute ignorance of domestic economy. The ministers
of Charles V, whatever talents they show for negotiation and
intrigue, were all equally ignorant of pecuniary affairs. They
ruined the public finances, agriculture, trade, and every kind of
industry, from one end of Europe to the other; they made the
people feel the difference, which might indeed have been
anticipated, between their ignorance and the practical knowledge
of republican magistrates.
Charles V, his rival Francis I, and Henry VIII, who wished to
hold the balance between them, had engaged in expenses beyond
their incomes; the ambition nf their successors, and the
obstinacy of the house of Austria, which continued to maintain a
destructive system of warfare during more than a hundred years,
caused those expenses, in spite of the public poverty, to go on
increasing. But as the suffering became more general, the friends
of humanity felt more deeply the obligation laid on them to
undertake the defence of the poor. By an order of sequence
opposite to the natural progress of ideas, the science of
political economy sprung from that of finance. Philosophers
wished to shield the people from the speculations of absolute
power. They felt that, to obtain a hearing from kings, they must
speak to them of royal interests, not of justice or duty. They
investigated the nature and causes of national wealth, to show
governments how it might be shared without being destroyed.
Too little liberty existed in Europe to allow those who first
occupied themselves with political economy to present their
speculations to the world; and finances were enveloped in too
profound a secrecy to admit of men, not engaged in public
business, knowing facts enough to form the basis of general
rules. Hence the study of political economy began with ministers,
when once it had fortunately happened that kings put men at the
head of their finances, who combined talents with justice and
love of the public weal. Two great French ministers, Sully under
Henry IV, and Colbert under Louis XIV, were the first who threw
any light on a subject till then regarded as a secret of state,
in which mystery had engendered and concealed the greatest
absurdities. Yet, in spite of all their genius and authority, it
was a task beyond their power to introduce any thing like order,
precision, or uniformity into this branch of government. Both of
them, however, not only repressed the frightful spoliations of
the revenue farmers, and by their protection communicated some
degree of security to private fortunes; but likewise dimly
perceived the true sources of national prosperity, and busied
themselves with efforts to make them flow more abundantly. Sully
gave his chief protection to agriculture. He used to say that
pasturage and husbandry wee the two beasts of the state. Colbert,
descended from a family engaged in the cloth trade, studied above
all to encourage manufactures and commerce. He furnished himself
with the opinion of merchants, and asked their advice on all
emergencies. Both statesmen opened roads and canals to facilitate
the exchange of commodities: both protected the spirit of
enterprise, and honoured the industrious activity which diffused
plenty over their country.
Colbert, the latter of the two, was greatly prior to any of
the writers who have teated political economy as a science, and
reduced it to a body of doctrines. He had a system, however, in
regard to national wealth: he required one to give uniformity to
his plans, and delineate clearly before his view the object he
wished to attain. His system was probably suggested by the
merchants whom he consulted. It is now generally known by the
epithet mercantile, sometimes also by the name Colbertism. Not
that Colbert was its author, or unfolded it in any publication;
but because he was beyond comparison the most illustrious of its
professors; because, notwithstanding the errors of his theory,
the applications he deduced from it were highly advantageous; and
because, among the numerous writers who have maintained the same
opinion, there is not one who has shown enough of talent even to
fix his name in the reader's memory. It is but just, however, to
separate the mercantile system altogether from the name of
Colbert. It was a system invented by trading subjects, not by
citizens; it was a system adopted by all the ministers of
absolute governments, when they happened to take the trouble of
thinking on finance, and Colbert had no other share in the matter
than that of having followed it without reforming it.
After long treating commerce with haughty contempt,
governments had at length discovered in it one of the most
abundant sources of national wealth. All the great fortunes in
their states did not indeed belong exclusively to merchants; but
when, overtaken by sudden necessity, they wished to levy large
sums at once, merchants alone could supply them. Proprietors of
land might possess immense revenues, manufacturers might cause
immense labours to be executed; but neither of them could dispose
of any more than their income or annual produce. In a case of
need merchants alone offered their whole fortune to the
government. As their capital was entirely represented by
commodities already prepared for consumption, by merchandise
destined for the immediate use of the market to which it had been
carried, they could sell it at an hour's warning, and realise the
required sum with smaller loss than any other class of citizens.
Merchants therefore found means to make themselves be listened
to, because they had in some sort the command of all the money in
the state, and were at the same time nearly independent of
authority - being able, in general, to hide from the attacks of
despotism a property of unknown amount, and transport it, with
their persons, to a foreign country, at a moment's notice.
Governments would gladly have increased the merchant's
profit, on condition of obtaining a share of it. Imagining that
nothing more was necessary than to second each other's views,
they offered him force to support industry. and since the
advantage of the merchant consists in selling dear and buying
cheap, they thought it would be an effectual protection to
commerce, if the means were afforded of selling still dearer and
buying still cheaper. The merchants whom they consulted eagerly
grasped at this proposal; and thus was founded the mercantile
system. Antonio de Leyva, Fernando de Gonnzago, and the Duke of
Alva, viceroys of Charles V and his descendants - the rapacious
inventors of so many monopolies - had no other notion of
political economy. But when it was attempted to reduce this
methodical robbery of consumers into a system; when deliberative
assemblies were occupied with it; when Colbert consulted
corporations; when the people at last began to perceive the true
state of the case, it became necessary to find out a more
honourable basis for such transactions; it became necessary not
only to study the advantage of financiers and merchants, but also
that of the nation: for the calculations of self-interest cannot
show themselves in open day, and the first benefit of publicity
is to impose silence on base sentiments.
Under these circumstances the mercantile system was moulded
into a plausible form; and doubtless it must have been plausible,
since, even till our own times, it continued to seduce the
greater part of practical men employed in trade and finance.
Wealth, said those earliest economists, is money: the two words
were received into universal use as almost entirely synonymous;
no one dreamed of questioning the identity of money and wealth.
Money, they said, disposes of men's labour and of all its fruits.
It is money which produces those fruits; it is by means of money
that industry continues in a nation; to its influence each
individual owes his subsistence and the continuation of his life.
Money is especially necessary in the relation of one state to
another. It supports war and forms the strength of armies. The
state which has it, rules over that which has it not. The whole
science of political economy ought, therefore, to have for its
object the increase of money in a nation. But the money possessed
by a nation cannot be augmented in quantity, except by the
working of mines, if the nation has any; or by foreign trade, if
it has none. All the exchanges carried on within a country, all
the purchases and sales which take place among Englishmen, for
instance, do not increase the specie contained within the shores
of England by a single penny. Hence it is necessary to And means
of importing money from other countries; and trade alone can do
this by selling much to foreigners and buying little from them.
For in the same way as each merchant in settling with his
correspondent, sees at the year's end whether he has sold more
than he has bought, and Ands himself accordingly creditor or
debtor by a balance account which must be paid in money; so
likewise a nation, by summing up all its purchases and all its
sales with each nation, or with all together, would find itself
every year creditor or debtor by a commercial balance which must
be paid in money. If the country pay this balance, it will
constantly grow poorer; if it receive the balance, it will
constantly grow richer.
For a century, the mercantile system was universally adopted
by cabinets; universally favoured by traders and chambers of
commerce; universally expounded by writers, as if it had been
proved by the most unexceptionable demonstration, no one deeming
it worth while to establish it by new proofs; when, after the
middle of the eighteenth century, Quesnay opposed to it his
Tableau Economique, afterwards expounded by Mirabeau and the Abbe
de Riviere, enlarged by Dupont de Nemours, and adopted by a
numerous sect which arose in France, under the name of
Economists. In Italy too this sect gained some distinguished
partisans. Its followers have written more about the science than
those of any other sect; yet they have admitted Quesnay's
principles with such blind confidence, and maintained them with
such implicit fidelity, that one is at a loss to discover any
difference of principle, or any progress of ideas in their
several productions.
Thus Quesnay founded a second system in political economy,
still named the territorial system, or more precisely the system
of the economists. He begins by asserting that gold and silver,
the signs of wealth, the means of exchange, the price of all
commodities, do not themselves constitute the wealth of states;
and that no judgment can be formed concerning the prosperity of a
nation, from the abundance of its precious metals. He next
proceeds to survey the different classes of men, all of whom,
occupied in gaining money, and causing wealth to circulate, even
when acquiring it for themselves, are not, according to him,
occupied with any thing besides exchange. He endeavours to
distinguish the classes possessed of a creative power; it is
amongst them that wealth must originate, all the transactions of
commerce appearing to be nothing else but the transmission of
that wealth from hand to hand.
The merchant who carries the productions of both hemispheres
from one continent to the other, and on returning to the ports of
his own country, obtains, at the sale of his cargo, a sum double
of that with which he began his voyage, does not, after all,
appear, in the eyes of Quesnay, to have performed any thing but
an exchange. If, in the colonies, he has sold the manufactures of
Europe at a higher price than they cost him, the reason is, they
were in fact worth more. Together with their prime cost, he must
also be reimbursed for the value of his time, his cares, his
subsistence, and that of his sailors and agents during the
voyage. He has a like reimbursement to claim on the cotton or
sugar he brings back to Europe. If, at the end of his voyage, any
profit remains, it is the fruit of his economy and good
management. The wages allowed him by consumers, for the trouble
he has undergone, are greater than the sum he had expended. It is
the nature of wages, however, to be entirely expended by him who
earns them; and had this merchant done so, he would have added
nothing to the national wealth, by the labour of his whole life;
because the produce which he brings back does nothing more than
exactly replace the valuE of the produce given for it, added to
his own wages, and the wages of all that were engaged with him in
the business.
Agreeably to this reasoning, the French philosopher gave to
transport trade the name of economical trade, which it still
retains. This species of commerce, he asserts, is not destined to
provide for the wants of the nation that engages in it, but
merely to serve the convenience of two foreign nations. The
carrying nation acquires from it no other profit than wages, and
cannot grow rich except by the saving which economy enables it to
make on them.
Quesnay, next adverting to manufactures, considers them an
exchange, just the same as commerce; but instead of having in
view two present values, their primitive contract is, in his
opinion, an exchange of the present against the future. The
merchandise produced by the labour of the artisan is but the
equivalent of his accumulated wages. During his labour, he had
consumed the fruits of the earth, and the work produced by him is
nothing but their value.
The economist next directs his attention to agriculture. The
labourer appears to him to be in the same condition as the
merchant and the artisan. Like the latter, he makes with the
earth an exchange of the present against the future. The crops
produced by him represent the accumulated value of his labour;
they pay his hire, to which he has the same right as the artisan
to his wages, or the merchant to his profit. But when this hire
has been deducted, there remains a net revenue, which was not be
found in manufactures and commerce; it is what the labourer pays
the proprietor for the use of his land. This revenue, Quesnay
thinks, is of a nature quite different from any other. It is not
wages; it is not the result of an exchange; it is the price of
the earth's spontaneous labour, the fruit of nature's
beneficence; and since it does not represent pre-existent wealth,
it alone must be the source of every kind of wealth. Tracing the
value of all other commodities, under all its transformations,
Quesnay still discovers its first origin in the fruits of the
earth. The labours of the husbandman, of the artisan, of the
merchant, consume those fruits in the shape of wages and produce
them under new forms. The proprietor alone receives them at their
source from the hands of nature herself, and by means of them is
enabled to pay the wages of all his countrymen, who labour only
for him.
This ingenious system totally supplanted that of the
merchants. The economists denied the existence of that commercial
balance to which their antagonists attached so much importance;
they asserted the impossibility of that accumulation of gold and
silver which the others expected from it; throughout the nation,
they could see only proprietors of land, the sole dispensers of
the national fortune; productive workmen, or labourers producing
the revenue of the former. and a hired class, in which they
ranked merchants also denying to them, as to the artisans, the
faculty of producing any thing.
The plans, which these two sects recommended to governments,
differed not less than their principles. While the mercantilists
wished authority to interfere in every thing, the economists
incessantly repeated laissez faire et laissez passer (let every
man do as he pleases, and every thing take its course;) for as
the public interest consists in the union of all individual
interests, individual interest will guide each man more surely to
the public interest than any government can do.
An excessive ferment was excited in France by the system of
the economists. The government of that nation allowed the people
to talk about public affairs, but not to understand them. The
discussion, of Quesnay's theory was sufficiently unshackled; but
none of the facts or documents in the hands of the
administration, were presented to the public eye. In the system
of the French economists, it is easy to discern the effects
produced by this mixture of ingenious theory and involuntary
ignorance. It seduced the people, because they were now for the
first time occupied with their own public affairs. But, during
these discussions, a free nation, possessed of the right to
examine its own public affairs, was producing a system not less
ingenious, and much better supported by fact and observation; a
system which, after a short struggle, at length cast its
predecessors into the shade; for truth always triumphs in the
end, over dreams, however brilliant.
Adam Smith, author of this third system, which represents
labour as the sole origin of wealth, and economy as the sole
means of accumulating it, has, in one sense, carried the science
of political economy to perfection, at a single step. Experience,
no doubt, has disclosed new truths to us; the experience of late
years, in particular, has forced us to make sad discoveries: but
in completing the system of Smith, that experience has also
confirmed it. Of the various succeeding authors, no one has
sought any other theory. Some have applied what he advanced to
the administration of different counties; others have confirmed
it by new experiments and new observations; some have expanded it
by developments, which flow from the principles laid down by him;
some have even here and there detected errors in his work; but it
has been by following out the truths which he taught and
rectifying them by light borrowed from its author. Never did
philosopher effect a more complete revolution in any science: for
those even who dissent from his doctrine acknowledge his
authority; sometimes they attack, solely because they do not
understand him; most commonly, they flatter themselves with the
belief of still following, even while they contradict him. We
shall devote the rest of this article to explain the science
which he taught us, though in an order different from his. We
shall arrange it under the six following heads: Formation and
Progress of Wealth: Territorial Wealth; Commercial Wealth; Money;
Taxes; and Population.
Chapter 2
Formation and Progress of Wealth
Man brings into the world with him certain wants, which he
must satisfy in order to live; certain desires which lead him to
expect happiness from particular enjoyments; and a certain
industry or aptitude for labour, which enables him to satisfy the
requisitions of both. His wealth originates in this industry: his
wants and desires are its employments. All that man values is
created by his industry; all that he creates is destined to be
consumed in satisfying his wants and desires. But, between the
moment of its production by labour, and its consumption by
enjoyment, the thing destined for man's use may have an existence
more or less durable. It is this thing, this accumulated and
still unconsumed fruit of labour, which is called wealth.
Wealth may exist not only without any sign of exchange, or
without money, but even without any possibility of exchange, or
without trade. Suppose a man to be left on a desert island; the
undisputed property of this whole island is not wealth, whatever
be the natural fertility of its soil, the abundance of the game
straying in its forests, of the fish sporting on its shores, or
the mines concealed in its bosom. On the contrary, amid all these
benefits presented him by nature, the man may sink to the lowest
degree of penury, and die perhaps of hunger. But, if his industry
enables him to catch some of the animals that wander in his
woods: and if, instead of consuming them immediately, he reserves
them for his future wants; if, in this interval, he gets them
tamed and multiplied, so that he can live on their milk, or
associate them to his labour, he is then beginning to acquire
wealth, because labour has gained him the possession of these
animals, and a fresh labour has rendered them domestic. The
measure of his wealth will not be the price, which he might
obtain for his property in exchange, because he is debarred from
all exchange, but the length of time during which no farther
labour will be requisite to satisfy his wants, compared with the
extent of those wants.
By subduing those animals, the man has made them his property
and wealth; by subduing the ground, he will, in like manner,
convert it into property and wealth. His island is destitute of
value so long as no labour has been bestowed on it; but if,
instead of consuming its fruits the moment they come to his hand,
he reserves them for future want; if he commits them again to the
earth, again to be multiplied; if he tills his fields to augment
their productive power, or defends them by inclosures from wild
beasts; if he plants them with trees, the fruit of which he does
not look for till many years have elapsed; he is then creating
the value, not only of annual produce raised by his labour from
the ground, but also of the ground itself, which he had tamed, as
he tamed the wild beasts, and rendered fit to second his
exertions. In that case he is rich, and the more so the longer he
can suspend his labours without suffering new wants.
Our Solitary, being now liberated from the most pressing of
all demands, that of hunger, may devote his exertions to provide
lodging and clothes, or to improve those already provided. He
will build himself a hut, and fit it out with such furniture as
his unaided labour may suffice to construct; he will change the
skin and fleeces of his sheep into shoes or coats; and the more
convenient his dwelling shall be rendered, the better his
storehouse shall be filled with provision for his future food and
clothing, the more rich may he call himself.
The history of this man is the history of the human race:
labour alone has created all kinds of wealth. However great the
beneficence of nature, she gives nothing gratuitously to man;
though, when addressed by him, she is ready to lend her
assistance in multiplying his powers to an indefinite extent. The
history of wealth is, in all cases, comprised within the limits
now specified - the labour which creates, the economy which
accumulates, the consumption which destroys. An article which has
not been wrought, or has not mediately or immediately received
its value from labour, is not wealth, however useful, however
necessary, it may be for life. An article, which is not useful to
man, which does not satisfy any of his desires, and cannot
mediately or immediately be employed in his service, is not more
entitled to the name of wealth, whatever labour may have been
bestowed on producing it. And finally, an article which cannot be
accumulated or kept for future consumption is not wealth, though
created by labour and consumed by enjoyment.
Before possessing any medium of exchange, before discovering
the precious metals which render it so easy to us, our Solitary
would ere long learn to distinguish the different kinds of labour
in their relation to wealth. Labour producing no enjoyment is
useless; labour, whose fruits are naturally incapable of being
stored up for future consumption, is unproductive; whilst the
only productive kinds of labour - the only kinds producing wealth
- are such as leave behind them, in the estimation even of our
Solitary, a pledge equal in value to the trouble they have cost.
Thus the man, misled by analogy, may have imagined that he could
multiply his olive-trees by planting the olives; he may not have
known but that the stones would germinate as in other such
vegetables; till, after preparing the ground by a complete and
fatiguing tillage, experience would teach him that his toil had
been useless, for no olive-tree was produced by it. On the other
hand, he may have secured his dwelling from wolves and bears; and
the labour would be useful but unproductive; for its fruits
cannot accumulate. If previously accustomed to civilized life, he
may have passed many hours in playing on a flute, saved, we shall
suppose, at his shipwreck; the labour would still be useful, and
probably regarded as his own pleasure; but it would be as
unproductive, and for a like reason, as before. He may have
bestowed on the care of his person and health much time, very
usefully employed; this will also be quite unproductive of
wealth. The Solitary will clearly perceive what difference there
is between productive labour and the labour of hours in which he
amasses nothing for the future; and, without excluding himself
from such occupations, he will call them a loss of time.
Whatever holds of the isolated man, with regard to creating
and preserving wealth, is true also of society, - when labour,
shared among numerous individuals, is recompensed by wages, while
its fruits are distributed by exchange. For the society, as well
as for the Solitary, there may be a useless as well as an
unproductive kind of labour; and, though both of them be paid,
they still preserve their distinct character, since the first
corresponds not to the desires or wants of the labourer's
employer, and the second admits no accumulation of its fruits.
The wage paid to the workmen in either case must not mislead us;
it puts the payer of it in the workman's place. The part which we
formerly supposed to be performed by a single individual, is now
shared among two or more persons; but the result is not altered
in the least. The day-labourer who plants olives performs a task
which is useless to his employer, though, if he receives his
hire, it may be advantageous to himself. The man who defends his
master or society against bears or hostile enterprises; who takes
charge of the health or the persons of others; who provides the
enjoyment of music, or dramatic exhibition, or dancing, performs,
just like the Solitary, a work which is useful because it is
agreeable, which is lucrative to him because he receives a hire
for his labour, whilst he abandons the enjoyment of it to his
employers; but which is unproductive notwithstanding, because it
cannot be the object of saving and accumulation. He who paid the
wage, no longer has either the wage itself in his possession, or
the thing for which he gave it.
Thus labour and economy - the true sources of wealth - exist
for the Solitary as well as for the social man, and produce the
same kind of advantage to both. The formation of society,
however, and with it the introduction of commerce and exchange,
were necessary both to augment the productive power of labour, by
dividing it, and to afford a more precise aim to economy, by
multiplying the enjoyments which wealth procures. Thus men,
combined in society, produced more than if each had laboured
separately; and they preserve better what they have produced,
because they feel the value of it better.
Exchange first arose from superabundance: "Give me that
article, which is of no service to you, and would be useful to
me,,, said one of the contacting parties, "and I will give you
this in return, which is of no service to me, and would be useful
to you." Present utility was not, however, the sole measure of
things exchanged. Each estimated for himself the selling price,
or the trouble and time bestowed in the production of his own
commodity, and compared it with the buying price, or the trouble
and time necessary for procuring the required commodity by his
own efforts; and no exchange could take place till the two
contacting parties, on calculating the matter, had each
discovered that it was better thus to procure the commodity
wanted than to make it for himself. This accidental advantage
soon pointed out to both a constant source of advantage in
trading, whenever the one offered an article which he excelled in
making, for an article which the other excelled in making; for
each excelled in what he made often, each was unskillful and slow
at what he made but seldom. Now, the more exclusively they
devoted themselves to one kind of work, the more dexterity did
they acquire in it, the more effectually did they succeed in
rendering it easy and expeditious. This observation produced the
division of trades; the husbandman quickly perceived, that he
could not make as many agricultural tools by himself, in a month,
as the blacksmith would make for him in a day.
The same principle which at first separated the trades of the
husbandman, shepherd, smith, and weaver, continued to separate
those trades into an indefinite number of departments. Each felt
that, by simplifying the operation committed to him, he would
perform it in a manner still more speedy and perfect. The weaver
renounced the business of spinning and dyeing; the spinning of
hemp, cotton, wool, and silk, became each separate employment;
weavers were still farther subdivided, according to the fabric
and the destination of their stuffs; and at every subdivision,
each workman, directing his attention to a single object,
experienced an increase in his productive powers. In the interior
of each manufactory, this division was again repeated, and still
with the same success. Twenty workmen all laboured at the same
thing, but each made it undergo a different operation: and the
twenty workmen found that they had accomplished twenty times as
much work as when each had laboured separately.
Much more work was executed in the world by the division of
labour; but, at the same time, much more was required to supply
the consumption. The wants and the enjoyments of the Solitary,
who laboured for himself, were both very limited. Food, clothing,
and lodging, he indeed required; but he did not so much as think
of the delicacies, by which the satisfaction of those wants might
be converted into pleasure; and still less of the artificial
desires, induced by society, which in their gratification become
new sources of enjoyment. The Solitary's aim was merely to amass,
that he might afterwards repose. Before him at no great distance,
was a point in the accumulation of wealth, beyond which it would
have been foolishness to accumulate more, because his consumption
could not be increased proportionably. But the wants of the
social man were infinite, because the society's labour offered
him enjoyment infinitely varied. Whatever wealth he might amass,
he could never have occasion to say it is enough; he still found
means to convert it into pleasure, and to imagine at least that
he applied it to his service.
Trade, the generic name given to the total mass of
exchangers, complicated the relation required to subsist between
production and consumption; yet far from diminishing, it
increased its importance. At first, every one procured what he
himself intended to consume; but when each had come to work for
all, the production of all must be consumed by all; and each, in
what he produced, must have an eye to the final demand of the
society, for which he destined the fruit of his labour. This
demand, though not well ascertained by him, was limited in
quantity. for, in order to continue his expenditure, every one
must confine it by certain restrictions, and the sum of those
private expenditures constituted that of the society. The
distinction between capital and income, which in the Solitary's
case was still confused, became essential in society. The social
man was under the necessity of adjusting his consumption to his
income, and the society, of which he formed part, were compelled
to observe the same rule; without incurring ruin, they could not
annually consume more than their annual income, leaving their
capital untouched. All that they produced, however, was destined
for consumption; and if their annual products, when carried to
the destined market, found no purchaser, reproduction was
arrested, and the nation ruined as before. We shall attempt to
explain this double relation, at once so essential and so
delicate, by showing, on the one hand, how income springs from
capital; on the other, how what is income for one may be capital
for a second.
To the Solitary, every kind of wealth was a provision made
beforehand against the moment of necessity; yet still in this
provision he distinguished two things - the part which it suited
his economy to keep in reserve for immediate, or nearly immediate
use, and the part which he would not need before the time when he
might obtain it by a new production. One portion of his corn was
to support him till the next harvest; another portion, set apart
for seed, was to bring forth its fruit the following year.
The formation of society, the introduction of exchange,
allowed him almost indefinitely to multiply this seed, - this
fruit-bearing portion of accumulated wealth. It is what we name
capital.
The ground and his animals were all that man could force to
work in concert with him; but, in society, the rich man could
force the poor to work in concert with him. After having set
apart what corn was necessary till the next harvest, it suited
him to employ the remaining surplus of corn in feeding other men,
that they might cultivate the ground and make fresh corn for him:
that they might spin and weave his hemps and wools; that, in a
word, they might take out of his hands the commodity ready for
being consumed, and at the expiration of a certain period, return
him another commodity, of a greater value, likewise destined for
consumption. Wages were the price at which the rich man obtained
the poor man's labour in exchange. The division of labour had
produced the distinction of ranks. The person who had limited his
efforts to perform only one very simple operation in a
manufacture, had made himself dependent on whoever chose to
employ him. He no longer produced a complete work, but merely the
part of a work; in which he required not only the cooperation of
other workmen, but also raw materials, proper implements, and a
trader to undertake the exchange of the article which he had
contributed to finish. Whenever he bargained with a
master-workman for the exchange of labour against subsistence,
the condition he stood in was always disadvantageous, since his
need of subsistence and his inability to procure it of himself,
were far greater than the master's need of labour; and therefore
he almost constantly narrowed his demand to bare necessaries,
without which the stipulated labour could not have proceeded;
whilst the master alone profited from the increase of productive
power brought about by the division of labour.
The master, who hired workmen, was situated, in all points,
exactly as the husbandman who sows the ground. The wages paid to
his workmen were a kind of seed which he entrusted to them, and
expected in a given time to bring forth fruit. Like the
husbandman, he did not sow all his productive wealth; a part of
it had been devoted to such buildings, or machines, or
implements, as make labour more easy and productive; just in the
way that a part of the husbandman's wealth was devoted to
permanent works, destined to render the ground more fertile. It
is thus that we see the different kinds of wealth springing up
and separating, whilst each exerts a different influence on its
own reproduction. The funds of consumption, such as domestic
necessaries, do not any longer produce fruit, after each has
secured them for his own use; fixed capital, such as improvement
of the soil, canals of irrigation, and machinery, during the
progress of its own slow consumption, co-operates with labour of
which it augments the products; and, lastly, circulating capital,
such as seed, wages, and raw materials, destined to be wrought,
is consumed annually, or even more rapidly, in order to be again
re-produced. It is essentially important to remark, that those
three kinds of wealth are all equally advancing towards
consumption. But the first when consumed is absolutely destroyed;
for societies, as for individuals, it is merely an expense:
whereas the second and third, after being consumed, are
re-produced under a new form; and for societies, as for
individuals, the consumption of them is a putting out to profit,
or the circulation of capitals.
We shall better understand this movement of wealth, which,
perhaps, it is difficult to follow, by fixing our observation on
a single family engaged in the simplest of all speculations. A
solitary farmer has reaped a hundred bags of corn, and is
destitute of any market to which he can carry it. At all events,
this corn must be consumed within the year, otherwise it will be
worth nothing to the farmer. But he and his family may require
only thirty bags of it; this is his expense: another thirty may
be employed to support workmen engaged in felling the forests, or
draining the marshes of the neighbourhood, to put them under
culture; this will be converting thirty bags into fixed capital:
and, finally, the remaining forty bags may be sown, and formed
into a circulating capital, in place of the twenty bags sown the
preceding year. The hundred are thus consumed; but seventy of
them are put out to profit, they will reappear partly at the next
harvest, partly at those which follow. By this means, in
consuming he will have saved. Yet the limits of such an operation
are easily discerned. If, this year, out of the hundred bags
which he reaped, he could get no more than sixty eaten, who will
eat the two hundred bags produced next year by the augmentation
of his seed?*
Resuming these three sorts of wealth, which, as we have seen,
become distinct in a private family, let us now consider each
sort with regard to the whole nation, and see how the national
revenue may arise from this division.
As the farmer required a primitive quantity of labour to be
expended in cutting down the forests, and draining the marshes
which he meant to cultivate; so, for every kind of enterprise,
there is required a primitive quantity of labour to facilitate
and augment the circulating capital. The ore cannot be obtained
till the mine is opened; canals must be dug, machinery and mills
must be constructed, before they can be used; manufactories must
be built, and looms set up, before the wool, the hemp, or the
silk can be weaved. This first advance is always accomplished by
labour; this labour is always represented by wages; and these
wages are always exchanged for necessaries of life, which the
workmen consume in executing their task. Hence what we have
called fixed capital, is a part of the annual consumption,
transformed into durable establishments, calculated to increase
the productive power of future labour. Such establishments
themselves grow old, decay, and are slowly consumed in their
turn, after having long contributed to augment the annual
production.
As the farmer required seed, which, after being committed to
the earth, was returned fivefold in harvest; so likewise, every
undertaker of useful labour requires raw materials to work upon,
and wages for his workmen, equivalent to the necessaries of life
consumed by them in their labour. His operations thus begin with
a consumption; and this is followed by a reproduction which
should be more abundant, since it must be equivalent to the raw
materials worked upon, so the necessaries of life consumed by his
workmen in their labour, to the sum by which his machinery and
all his fixed capitals have been deteriorated during the
production, and lastly to the profit of all concerned in the
labour, who have supported its fatigues solely in the hope of
gaining by it. The farmer sowed twenty bags of corn to reap a
hundred; the manufacturer will make a calculation nearly similar.
And as the farmer at harvest must recover not only a compensation
for his seed, but likewise for all his labours, so the
manufacturer must find in his production, not the raw materials
only, but all the wages of his workmen, all the interests and
profits of his fixed capital, with all the interests and profits
of his circulating capital.
In the last place, the farmer may augment his seed every
year; but he will not fail to recollect that, since his crops
increase in the same necessaries, he is not sure of always
finding men to eat them. The manufacturer, in like manner,
devoting the savings of each year to increase his re-production,
must recollect the necessity of finding purchasers and consumers
for the increasing products of his establishment.
Since the fund destined for consumption no longer produces
any thing, and since each man strives incessantly to preserve and
augment his fortune, each will also restrict his consumable fund,
and instead of accumulating in his house a quantity of
necessaries greatly superior to what he can consume, he will
augment his fixed or circulating capital, by all that he does not
expend. In the present condition of society, a part of the fund
destined for consumption remains in the retail-dealer's hand,
awaiting the buyer's confidence; another part destined to be
consumed very slowly, as houses, furniture, carriages, horses,
continues in the hands of persons whose business it is to sell
the use of it, without abandoning the property. A considerable
portion of the wealth of opulent nations is constantly thrown
back into the fields destined for consumption; but although it
still gives profit to its holders, it has ceased to augment the
national re-production.
The annual distribution of the wealth, annually reproduced,
among all the citizens composing the nation, constitutes the
national revenue. It consists of all the value, by which the
re-production surpasses the consumption that produced it. Thus
the farmer, after deducting from his crop a quantity equal to the
seed of the foregoing year, finds remaining the part which is to
support his family, - a revenue to which they have acquired right
by means of their annual labour; the part which is to support his
workmen, who have acquired the right to it by the same title; the
part with which he is to satisfy the landlord, who has acquired
right to this revenue by the original improvement of the soil,
now no longer repeated; and lastly, the part with which he is to
pay the interest of his debts, or indemnify himself for the
employment of his own capital - a revenue to which he has
acquired right by the primitive labours which produced his
capital.
So likewise, the manufacturer finds, in the annual produce of
his manufactory, first the raw material employed; secondly, the
equivalent of his own wages, and those of his workmen, to which
their labour alone gives them right; thirdly, an equivalent for
the annual detriment and interest of his fixed capital, to which
revenue he or the proprietor has acquired right by a primitive
labour; and lastly, an equivalent for the interest of his
circulating capital, which has been produced by another primitive
labour.
It is to be observed that, among those who share the national
revenue, some acquire a new right in it every year by a new
labour, others have previously acquired a permanent right by a
primitive labour, which has rendered the annual labour more
advantageous. No one obtains a share of the national revenue,
except in virtue of what he himself or his representatives have
accomplished to produce it; unless, as we shall soon see, he
receives it at second hand, from its primitive proprietors, by
way of compensation for services done to them. Now, whoever
consumes without fulfilling the condition which alone gives him
right to the revenue; whoever consumes without having a revenue,
or beyond what he has; whoever consumes his capital in place of
revenue, is advancing to ruin; and a nation composed of such
consumers is advancing to ruin likewise. Revenue, indeed, is that
quantity by which the national wealth is increased every year,
and which accordingly may be destroyed, without the nation's
becoming poorer; but the nation which, without re-production,
destroys a quantity of wealth, superior in this annual increase,
destroys the very means by which it would have acquired an equal
re-production in subsequent years.
By a circular concatenation, in which every effect becomes a
cause in its turn, production gives revenue, revenue furnishes
and regulates a consumable fund, which fund again causes
production and measures it. The national wealth continues to
augment, and the state to prosper, so long as these three
quantities, which are proportional to each other, continue to
augment in a gradual manner, but whenever the proportion among
them is broken, the state decays. A derangement of the mutual
proportion subsisting among production, revenue, and consumption,
becomes equally prejudicial to the nation, whether the production
give a revenue smaller than usual, in which case a part of the
capital must pass to the fund of consumption; or whether, on the
contrary, this consumption diminish, and no longer call for a
fresh production. To cause distress in the state, it is enough
that the equilibrium be broken. Production may diminish when
habits of idleness gain footing among the labouring classes;
capital may diminish when prodigality and luxury become
fashionable; and lastly, consumption may diminish from causes of
poverty, unconnected with the diminution of labour, and yet, as
it will not offer employment for future re-production, it must
diminish labour in its turn.
Thus nations incur dangers that seem incompatible: they fall
into ruin equally by spending too much, and by spending too
little. A nation spends too much whenever it exceeds its revenue,
because it cannot do so except by encroaching on its capital, and
thus diminishing future production; it then does what the
solitary cultivator would do if he should eat the corn which
ought to be secured for seed. A nation spends too little,
whenever, being destitute of foreign commerce, it does not
consume its own production; or when, enjoying foreign commerce,
it does not consume the excess of its production above its
exportation; for, if so, it soon comes into the condition of the
solitary cultivator, who having filled all his granaries far
beyond the probability of consumption, would be obliged, that he
might not work in vain, partly to abandon his cultivation of the
ground.
The nation does not indeed spend all that it consumes; the
name expenditure, in such a case, can properly be given to that
consumption only which produces nothing; while that part of the
consumption which represents the wages of productive workmen, is
an employment of funds, not an expenditure. Thus, the nation,
when it forms manufacturing establishments, does not diminish its
consumption; it consumes, in a productive manner, what it
formerly consumed unproductively. Still, however, this employment
of the national produce in giving movement to new labour, though
it does not destroy the balance between production and
consumption, renders it much more complex. The new produce thus
obtained must, at last, find a consumer; and though it may be
generally affirmed, that to increase the labour is to increase
the wealth, and with it in a similar proportion the revenue and
the consumption; still it is any thing but proved, that by too
rapid an increase of its labour a nation may not altogether
deviate from the proper rate of consumption, and thus ruin itself
by economy as well as prodigality. Happily, in most cases, the
increase of capital, of revenue and of consumption, requires no
superintendence; they proceed, of their own accord, with an equal
pace; and when one of them, at any time, happens to pass the
others for an instant, foreign commerce is almost always ready to
restore the equilibrium.
We have designedly carried on our history of the formation
and progress of wealth thus far, without mentioning a circulating
medium, to show, that, in fact, such an instrument is not
necessary for its development. A circulating medium did not
create wealth; but it simplified all the relations, and
facilitated all the transactions of commerce; it gave to each the
means of finding sooner what suited him best; and thus presenting
an advantage to every one, it still further increased the wealth,
which was already increasing without it.
The precious metals are one of the numerous values produced
by the labour of man, and applicable to his use. It was soon
discovered that they, more than any other species of riches,
possessed the property of being preserved without alteration for
any length of time, and the no less valuable one of uniting
easily into a single whole, after being divided almost
infinitely. The two halves of a piece of cloth, of a fleece, and
still less of an ox, - though these are supposed to have once
been employed as money, - were not worth the whole; but the two
halves, the four quarters of a pound of gold are always, and will
be, a pound of gold, however long they may be kept. As the first
exchange of which men feel the need, is that which enables them
to preserve the fruit of their labour for a future season, every
one became eager to get precious metals in exchange for his
commodity, whatever it might be; not because he at all intended
to use those metals himself; but because he was sure of being
able to exchange them at any time afterwards, in the same manner,
and for the same reason, against whatever article he might then
need. From that time the precious metals began to he sought
after, not that they might be employed in the use of man, as
ornaments or utensils, but that they might be accumulated, at
first, as representing every species of wealth, and then that
they might be used in commerce, as the means of facilitating all
kinds of exchange.
Gold dust, in its primitive state, continues, even now, to be
the medium of exchange among the African nations. But when once
the value of gold comes to be universally admitted, there remains
but a single step, much easier and far less important, till it be
converted into coin, which warrants, by a legal stamp, the weight
and the fineness of every particle of the precious metals
employed in circulation.
The invention of money gave quite a new activity to exchange.
Whoever happened to possess any superfluity had no longer
occasion to seek the article likely to be needed in time to come.
He no longer delayed selling his corn till he should meet the
oil-merchant or the wool-dealer to offer them the thing they
wanted; he reckoned it enough to find money, being certain that
for this he could always obtain any required commodity. The
buyer, too, on his side, needed not to study what would suit the
seller: money was always sure to satisfy all his demands. Before
the invention of a circulating medium, a fortunate concurrence of
conveniences was requisite for an exchange: whereas after this
invention, there could scarcely be a buyer that did not find a
seller, or a seller who did not find a buyer.
As exchanges, and afterwards sales and purchases, were
voluntary, it might be inferred that all values were given for
values completely equal. It is more correct, however, to say,
that bargains were never made without advantages to both parties.
The seller found a profit in selling, the buyer in buying. The
one drew more advantages from the money which he received, than
he would have done from his merchandise; the other more advantage
from the merchandise which he acquired, than he would have done
from his money. Both parties had gained, and hence the nation
gained doubly by their bargain. On the same principle when a
master set any workman to labour, and gave him in exchange for
the work expected to be done, a wage which corresponded to the
workman's maintenance during his labour; - both these contractors
gained; the workman because he had received in advance the fruit
of his labour before it was accomplished; - the master, because
this workman's labour was worth more than his wages. The nation
gained with both; for as the national wealth must, at the long
run, be realized in enjoyment, Whatever augments the enjoyment of
individuals, must be considered as a gain for all.
Thus the labour of man created wealth; but wealth, in its
turn, created the labour of man. Wherever wealth offered a
profit, a wage, a subsistence, it produced a class of men, eager
to acquire them. The accumulation of primary labour had created
the value of land, by unfolding its productive power. This power,
as it seconded the labour, of man, henceforth became a species of
wealth; and a person possessed of land might, without himself
labouring, obtain payment for surrendering the use of it to such
as laboured. Hence the origin of sales and leases of land. The
farmer again might hire workmen to labour, and thus might acquire
the advantages attached to exchanging present subsistence against
distant produce. He incurred all the charges of cultivation, he
drew all its profits, and left to his workmen nothing but their
wages. Thus the revenues of land, all comprised in the annual
crop, were divided among three classes of men, under the name of
rent, profit, and wages; whilst a surplus included the seed and
the farmer's advance.
The manufacturer again possessed machinery and materials: he
offered to his labourers an immediate subsistence for the fruit
of a labour which required time and long advances. He enabled
them to live, he furnished them with lodging, tools, machinery,
and paid himself with interest by their work. If, in his own
hand, he had not enough of accumulated wealth, or enough of the
money which represents it, to provide his workmen with all the
advances which their enterprise required, and to wait for the
sale of their labour, he borrowed money, and paid the lender an
interest, analogous to the rent which a farmer pays his landlord.
The labour of the workmen employed by him annually produced a
certain quantity of goods, in the value of which were to be
included the interest of capital for the money-lender, the rent
of implements, machines, immovables, and all kinds of fixed
capital; the profits of the head manufacturer, the wages of his
workmen, and, lastly, the capital expended in raw materials,
together with the whole of that capital which, as it circulates
annually in the manufactory, must be deducted from its annual
produce, in order to leave the net revenue.
The produce of the soil and of manufactories belonged often
to climates very distant from those inhabited by their consumers.
A class of men undertook to facilitate all kinds of exchange, on
condition of sharing in the profits which it yields. These men
gave money to the producer, at the time when his work was
finished and ready for sale; after which having transported the
merchandise to the place where it was wanted, they waited the
consumer's convenience, and retailed to him in parcels what he
could not purchase all at once. They did service to every one,
and repaid themselves for it by the share which is named profits
of trade. The advantage arising from a judicious management of
exchanges was the origin of those profits. In the north, a
producer reckoned two measures of his merchandize equivalent to
one of southern merchandize. In the south, on the other hand, a
producer reckoned two measures of his merchandize equivalent to
one of northern merchandize. Between two equations so different
there was room to cover all the expenses of transport, all the
profits of trade, and interest for all the money advanced to
carry it on. In fact, at the sale of such commodities transported
by commerce, there must be realized, first the capital repaid to
the manufacturer; then the wages of the sailors, carriers,
clerks, and all persons employed by the trader; next the interest
of all those funds to which he gives movement; and lastly, the
mercantile profit.
Society requires something more than wealth; it would not be
complete if it contained nothing but productive labourers. It
requires administrators, judges, lawgivers; men employed about
its general interests; soldiers and sailors to defend it. No one
of those classes produces any thing; their labour never assumes a
material shape; it is not susceptible of accumulation. Yet
without their assistance all the wealth arising from productive
labour would be destroyed by violence; and work would cease, if
the labourer could not calculate on peaceably enjoying its
fruits. To support this guardian population, a part must be
deducted from the funds created annually by labour. But as the
service done to the community, by such persons, how important
soever it be, is felt by no one in particular; it cannot, like
other services, be an object of exchange. The community itself
was under the necessity of paying it by a forced contribution
from the revenues of all. It was not long, indeed, till this
contribution came to be regulated by the persons destined to
profit from it; and hence the contributors were loaded without
measure; civil and military offices were multiplied far beyond
what the public weal required; there was too much government, too
much defence of men, who were forced to accept those services,
and to pay them, superfluous or even burdensome as they might be;
and the rulers of nations, established to protect wealth, were
often the main authors of its dilapidation.
Society needs that kind of labour which produces mental
enjoyments; and as mental enjoyments are, nearly all, immaterial,
the objects destined to satisfy them cannot be accumulated.
Religion, science, the arts, yield happiness to man; their origin
is labour, their end enjoyment; but what belongs only to the soul
is not capable of being treasured up. If a nation, however, does
not reckon literature and the arts among its wealth, it may
reckon literary men and artists; the education they receive, the
distinction they acquire, accumulate a high value on their heads;
and the labour which they execute being often better paid than
that of the most skilled workmen, may thus contribute to the
spread of opulence.
Society, in the last place, needs those kinds of labour, the
object of which is to take care of the persons, not the fortunes
of men. Such labour may be of the most elevated, or of the most
servile kind: according as it requires either the knowledge of
nature and the command of her secrets, like the physician's
labour, or merely complaisance and obedience to the will of a
master, like the footman's labour. All of them are species of
labour intended for enjoyment, and differing from productive
labour, only in so far as their effects are incapable of
accumulation. Hence, though they add to the well-being of a
state, they do not add to its wealth; and such as are employed in
them must live on voluntary contributions drawn from the revenue
formed by other kinds of labour.
Chapter 3
Of Territorial Wealth
The riches proceeding from land should be the first to engage
the attention of an economist or a legislator. They are the most
necessary of all, because it is from the ground that our
subsistence is derived; because they furnish the materials for
every other kind of labour; and lastly, because, in preparation,
they constantly employ the half, often much more than the half,
of all the nation. The class of people who cultivate the ground
are particularly valuable for bodily qualities fitted to make
excellent soldiers, and for mental qualities fitted to make good
citizens. The happiness of a rural population is also more easily
provided for than that of a city population; the progress of this
kind of wealth is more easily followed; and government is more
culpable when it allows agriculture to decay, because it almost
always lies in the power of government to make it flourish.
The annual revenue of land, or the annual crop, is
decomposed, as we observed above, in the following manner. One
part of the fruits, produced by labour, is destined to pay the
proprietor for the assistance which the earth has given to the
labour of men, and also for the interest of all the capital
successively employed to improve the soil. This portion alone is
called the net revenue. Another part of the fruits replaces what
has been consumed in executing the labour to which the crop is
due, the seed, and all the cultivator's advances. Economists call
this portion the resumption. Another part remains for a profit to
the person who directed the labours of the ground: it is
proportionate to his industry and the capital advanced by him.
Government likewise takes a share of all those fruits, and by
various imposts diminishes the proprietor's rent, the
cultivator's profit, and the day-labourer's wages, in order to
form a revenue for another class of persons. Nor do the fruits
distributed among the workmen, the superintendent of the labour,
and the proprietor, entirely remain with them in kind: after
having kept a portion requisite for their subsistence, the whole
then equally part with what remains, in exchange for objects
produced by the industry of towns; and it is by means of this
exchange, that all other classes of the nation are supplied with
food.
The net revenue of territorial produce is considered to be
that portion which remains with proprietors after the expenses of
cultivation have been paid. Proprietors frequently imagine that a
system of cultivation is the better, the higher those rents are:
what concerns the nation, however, what should engage the
economist's undivided attention, is the gross produce, or the
total amount of the crop; by which subsistence is provided for
the whole nation, and the comfort of all classes is secured. The
former comprehends but the revenue of the rich and idle; the
latter farther comprehends the revenue of all such as labour, or
cause their capital to labour.
But a gradual increase of the gross produce may itself be the
consequence of a state of suffering, - if the population, growing
too numerous, can no longer find a sufficient recompense in the
wages of labour, and if, struggling without protection against
the proprietors of land, to whom limitation of number gives all
the advantage of a monopoly, that population is reduced to
purchase, by excessive labour, so small an augmentation of
produce, as to leave it constantly depressed by want, There is no
department of political economy which ought not to be judged in
its relation to the happiness of the people in general; and a
system of social order is always bad when the greater part of the
population suffers under it.
Commercial wealth is augmented and distributed by exchange;
and even the produce of the ground, so soon as it is gathered in,
belongs likewise to commerce. Territorial wealth, on the other
hand, is created by means of permanent contacts. With regard to
it, the economist's attention should first be directed to the
progress of cultivation: next to the mode in which the produce of
the harvest is distributed among those who contribute to its
growth; and lastly, to the nature of those rights which belong to
the proprietors of land, and to the effects resulting from an
alienation of their property.
The progress of social order, the additional security, the
protection which government holds out to the rights of all,
together with the increase of population, induce the cultivator
to entrust to the ground, for a longer or shorter period, the
labour which constitutes his wealth. In the timorous condition of
barbarianism, he will not, at his own expense, increase the value
of an immovable possession, which perhaps he may be forced to
abandon at a moment's warning. But in the security of complete
civilization, he regards his immovable possessions as more
completely safe than any other kind of wealth. In the deserts of
Arabia and Tartary; in the savannahs of America, before
civilization has begun; in the pastures of the Campagna di Roma,
or the Capitanata de la Pouille, after it has ended, men are
contented with the natural fruits of the ground, with grass for
their cattle to browse; and if those vast deserts yet retain any
value, they owe it less to the slight labour by which the
proprietor has inclosed them, than to the labour by which the
herdsman has multiplied the oxen and sheep which feed upon them.
When the population of such deserts has begun to increase,
and an agricultural life to succeed that of shepherds, men still
abstain from committing to the ground any labour whose fruit they
cannot gather till after many years have elapsed. The husbandman
tills, to reap in the following season; the course of a
twelvemonth is sufficient to give back all his advances. The
earth which he has sown, far from gaining a durable value by his
labour, is, for a time, impoverished by the fruits it has born.
Instead of seeking to improve it by more judicious cultivation,
he gives it back to the desert for repose, and next year tills
another portion. The custom of fallowing, a remnant of this half
savage mode of agriculture, continues to our own time, in more
than three-fourths of Europe.
But when population and wealth have at last increased so as
to make every kind of labour easy, and when social order inspires
security enough to induce the husbandman to fix his labour in the
ground, and transmit it with the soil to his descendants,
improvement altogether changes the appearance of the earth. Then
are formed those plantations of gardens, orchards, vineyards, the
enjoyment of which is destined for a late posterity; then are dug
those canals for draining or irrigation, which diffuse fertility;
then arise upon the hills those hanging terraces, which
characterized the agriculture of ancient Canaan. A quick rotation
of crops of a different nature reanimates, instead of exhausting,
the strength of the soil; and a numerous population lives on a
space, which, according to the primitive system, would hardly
have supported a few scores of sheep.
The trade or the manufactures of a country, are not to be
called prosperous, because a small number of merchants have
amassed immense fortunes in it. On the contrary, their
extraordinary profits almost always testify against the general
prosperity of the country. So likewise, in counties abandoned to
pasturage, the profits realized by some rich proprietors ought
not to be regarded as indicating a judicious system of
agriculture. Some individuals, it is true, grow rich; but the
nation, which the land should maintain, or the food which should
support it, are no where to be found. It is not even certain that
the net produce of the land may not diminish, in proportion as
its agriculture yields a more abundant produce, and a greater
number of citizens live on its fruits; just as we see the net
produce of money, or its interest, diminish in proportion as a
country becomes more commercial, and contains more capital.
The first proprietors of land were doubtless themselves
cultivators, and executed all kinds of field labour, with their
children and servants. To these, in ancient times, were added
slaves; the continual state of war, which exists among
semi-barbarous societies, having introduced slavery at the
remotest era. The stronger found it more convenient to procure
workmen by the abuse of victory than by bargain. Yet so long as
the head of each family laboured along with his children and
slaves, the condition of the latter was less wretched; the master
felt himself to be of the same nature with his servant; he
experienced the same wants and the same fatigue; he desired the
same pleasures, and knew, by experience, that he would obtain
little work from a man whom he fed badly. Such was the
patriarchal mode of cultivation, that of the golden days of Italy
and Greece; such is that of free America; such appears to be that
of Africa, in its interior; and such, finally, but without
slavery, and therefore with still more domestic comfort, is that
of Switzerland, where the peasant proprietor is happier than in
any other country of the world.
Among the states of antiquity, the farms under cultivation
were small; and the number of freemen labouring in the fields,
always greatly surpassed that of slaves. The former had a full
enjoyment of their persons and the fruits of their labour; the
latter, degraded rather than unhappy, like the ox, man's
companion, which interest teaches him to spare, seldom
experienced suffering, want still more rarely. The head of each
family alone receiving the total crop, did not distinguish the
rent from the profit or the wages; with the excess of what he
wanted for food, he procured the produce of the town in exchange,
and this excess supported all other classes of the nation.
But the progress of wealth, of luxury, and idleness, in all
the states of antiquity, substituted the servile for the
patriarchal mode of cultivation. The population lost much in
happiness and number by this change; the earth gained little in
productiveness. The Roman proprietors extending their patrimonies
by the confiscated territories of vanquished states; the Greeks
by wealth acquired from trade,first abandoned manual labour, and
soon afterwards, despised it. Fixing their residence in towns,
they entrusted the management of their estates to stewards and
inspectors of slaves; and from that period, the condition of most
part of the country population became intolerable. Labour, which
once been a point of communion betwixt the two ranks of society,
now became a barrier of separation; contempt and severity
succeeded to affectionate care; punishments were multiplied as
they came to be inflicted by inferiors, and as the death of one
or several slaves did not lessen the steward's wealth. Slaves who
were ill-fed, ill-teated, ill-recompensed, could not fail to lose
all interest in their master's affairs, and almost all
understanding. Far from attending to their business with
affection, they felt a secret joy every time they saw their
oppressors' wealth diminished, or his hopes deceived. The study
of science, accompanied with habits of observation, certainly
advanced the theory of agriculture: but its practice, at the same
time, rapidly declined; a fact, which all the agricultural
writers of antiquity lament. The cultivation of land was entirely
divested of all that intelligence, affection, and zeal, which had
once hastened its success. The revenues were smaller, the
expenses greater; and from that period, it became an object to
save labour, more than to augment its produce. Slaves, after
having driven every free cultivator from the fields, were
themselves rapidly decreasing in number. During the decline of
the Roman empire, the population of Italy was not less reduced
than that of the Agro Romano is in our days; while, at the same
time, it had sunk into the that degree of wretchedness and
penury. The cultivation of the colonies situated on the Mexican
Gulf was founded, in like manner, on the baneful system of
slavery. it has, in like manner, consumed the population, debased
the human species, and deteriorated the system of agriculture.
The negro trade has of course filled up those voids, which the
barbarity of planters annually produced in the agricultural
population; and doubtless, under a system of culture, such that
the man who labours is constantly reduced below the necessaries
of life, and the man who does not labour keeps all for himself,
the net produce has always been considerable; but the gross
produce, with which alone the nation is concerned, has uniformly
been inferior to what would have arisen from any other system of
cultivation, whilst the condition of more than seven-eighths of
the population has continued to be miserable.
The invasions of the Roman empire, by the barbarians,
introduced new manners, and, with them, new systems of
cultivation. The conqueror, who had now become proprietor, being
much less allured by the enjoyments of luxury, had need of men
still more than of wealth. He had ceased to dwell in towns, he
had established himself in the country; and his castle formed a
little principality, which he wished to be able to defend by his
own strength, and thus he felt the necessity of acquiring the
affection of such as depended on him. A relaxation of the social
bond, and the independence of great proprietors, produced the
same effects without the limits of the ancient Roman empire as
within. From the epoch of its downfall, masters in every part of
Europe began to improve the condition of their dependents; and
this return to humanity produced the natural effect; it rapidly
increased the population, the wealth, and the happiness of rural
labourers.
Different expedients were resorted to for giving slaves and
cultivators an interest in life, a property, and an affection for
the place of their nativity, as well as for its lord. Adopted by
various states, these expedients produced the most decisive
influence on territorial wealth and population. In Italy, and
part of France and Spain, and probably in most part of the former
Roman empire, the master shared the land among his vassals, and
agreed with them to share the crops in a raw state. This is
cultivation for half produce. In Hungary, Poland, Bohemia, and
all that portion of Germany occupied by Slavonic tribes, the
master much more rarely enfranchised his slaves. Keeping them
always under an absolute dependence, as serfs attached to the
soil, he gave them, however, one half of his land, reserving the
other to himself. He wished to share, not the fruits of their
labour, but their labour itself, and therefore he obliged them to
work for him two, three, and in Transylvania, four days of each
week. This is cultivation by corvees. In Russia, and several
provinces of France and England, masters likewise distributed
their lands among vassals; but, instead of wishing to participate
either in the lands or the harvests, they imposed a fixed
capitation. Such was the abundance of uncultivated land always
ready to be cleared, that, in the eyes of those proprietors, the
only difference in the condition of agricultural families was the
number of workmen included in them. To capitation was always
joined the obligation of personal service, and the vassal's
continuance in a servile state. Yet, according as the laws
watched more or less strictly over the subject's liberty,
cultivation upon this principle raised the husbandman to a
condition more or less comfortable. In Russia, he never escaped
from servitude of the soil; in England, by an easy transition, he
arrived at the rank of farmer.
The system of cultivation by metayers, or cultivation at half
produce, is perhaps one of the best inventions of the middle
ages. It contributes, more than any thing else, to diffuse
happiness among the lower classes, to raise land to a high state
of culture, and accumulate a great quantity of wealth upon it. It
is the most natural, the easiest, and most advantageous step for
exalting the slave to the condition of a freeman, for opening his
understanding, teaching him economy and temperance, and placing
in his hands a property which he will not abuse. According to
this system, the peasant is supposed to have no capital, or
scarcely any, but he receives the land sown and fully stocked; he
takes the charge of continuing every operation, of keeping his
farm in the same state of culture, of delivering to his master
the half of each crop; and, when the lease expires, of returning
the land under seed, the folds furnished, the vines propped, and
every thing, in short, in the same state of completeness as it
was when he received it.
A metayer finds himself delivered from all those cares which,
in other counties, weigh heavily on the lower class of the
people. He pays no direct tax, his master alone is charged with
it; he pays no money-rent, and therefore he is not called to sell
or to buy, except for his own domestic purposes. The term, at
which the farmer has to pay his taxes or his rent, does not press
the metayer; or constrain him to sell before the season, at a low
price, the crop which rewards his industry. He needs but little
capital, because he is not a dealer in produce; the fundamental
advances have been made once for all by his master; and as to the
daily labour, he performs it himself with his family; for
cultivation upon this principle brings constantly along with it a
great division of the land, or what is called cultivation on the
small scale.
Under this system, the peasant has an interest in the
property, as if it were his own; without the anxieties of wealth,
he finds in his farm every enjoyment, with which nature's
liberality rewards the labour of man. His industry, his economy,
the development of his understanding, regularly increase his
little stock. In good years, he enjoys a kind of opulence; he is
not entirely excluded from the feast of nature which he prepares;
his labour is directed according to the dictates of his own
prudence, and the plants that his children may gather the fruit.
The high state of culture to be found in the finest parts of
Italy, above all of Tuscany, where the lands are generally
managed in this way. the accumulation of an immense capital upon
the soil: the invention of many judicious rotations, and
industrious processes, which an intelligent, observing spirit
alone could have deduced from the operations of nature; the
collection of a numerous population, upon a space very limited
and naturally barren, shows plainly enough that this mode of
cultivation is as profitable to the land itself as to the
peasant, and that, if it imparts most happiness to the lower
class who live by the labour of their hands, it also draws from
the ground the most abundant produce, and scatters it with most
profusion among men.
But whenever a country arrives at complete civilization,
whenever the property and safety of individuals are sufficiently
protected, the usual population increases beyond what husbandry
can employ; the extent of land is limited, the population is not
so. A great number of families are brought up on one farm, and
sent away by some accidental cause; penury compels them to offer
their services to some proprietor, for a recompence smaller than
what is given to such as are actually employed. Labourers outbid
each other, and at length go so far as to content themselves with
the most niggardly subsistence, with a portion barely sufficient
in good years, and which in bad years leaves them a prey to
famine. This foolish species of competition has reduced the
peasantry on the coast of Genoa, in the republic of Lucca, in
several provinces of the kingdom of Naples, to content themselves
with a third of the crop, in place of a half. In a magnificent
country, which nature has enriched with all her gifts; which art
has adorned with all its luxury; which annually gives forth a
most abundant harvest - the numerous class that produce the
fruits of the ground never taste the corn which is reaped or the
wine which is pressed, by their labour, and struggle continually
with famine. The same misfortune would probably have happened to
the people of Tuscany, if public opinion had not guarded the
farmer; but there no proprietor dares to impose terms unusual in
the country, and when he changes one metayer for another, he
changes no article of the primitive contact. So soon, however, as
public opinion becomes necessary for the maintenance of public
prosperity, it ought, in strict propriety, to be sanctioned by
law. Whenever vacant lands are no longer to be found, proprietors
of the soil come to exercise a kind of monopoly against the rest
of the nation; and wherever monopoly exists, the legislature
ought to interpose, lest they who enjoy may also abuse it.
Cultivation by corvees was very far from being as happy an
invention. No doubt it gave to the peasantry a kind of property,
an interest in life; but it reduced them to see their domestic
economy disturbed every moment, by the vexatious demands of a
landlord or his stewards. The peasant could not perform the
operations of his husbandry at the day fixed upon; the landlord's
work must always be done before his own; the rainy days
constantly fell to the share of the weaker party. Under this
system, the labourer performs every service for his master with
repugnance, without care for its success, without affection, and
without reward. In the landlord's fields, he works as badly as he
can without incurring punishment. The steward, on the other hand,
declares it absolutely necessary that corporal penalties be
employed; and the infliction of them is abandoned to his own
discretion. Servitude of the soil has nominally been abolished in
several countries, which have adopted the system of cultivation
by corvees; but so long as this general system of agriculture is
in force, there cannot be any liberty for the peasant. And
although the abolition of servitude has given vassals a property
and right, which the landlord did not formerly acknowledge, it
has hardly at all bettered their conditions. They are as
constantly thwarted and disturbed in their own operations as
before; they work quite as ill during the landlord's day's; they
are quite as miserable within their huts; and the master, who had
been flattered with hopes that the abolition of slavery would
increase his revenue, has derived no advantage from it. On the
contrary, he is ever an object of hatred and distrust to his
vassals; and social order, threatened so incessantly, cannot be
maintained except by violent means.
The ground of the metayer's contract is every way the same,
as that of a contract with the cultivator by corvees. The
landlord in Hungary, as in Italy. has given up his land to the
peasant, on condition of receiving half its fruits in return. In
both countries, the other half has been reckoned sufficient for
supporting the cultivator, and repaying his advances. A single
error in political economy has rendered what is highly
advantageous for one of these countries disastrous for the other.
The Hungarian has not inspired the labourer with any interest in
his own industry. by sharing the land and the days of the week,
he has made an enemy of the man, who should have been his
coadjutor. The labour is performed without zeal or intelligence;
the master's share, inferior to what it would have been according
to the other system, is collected with fear; the peasant's share
is so reduced, that he lives in constant penury; and some of the
most fertile counties in the world have already been for ages
doomed to this state of wretchedness and oppression.
But the legislator's interference, which we claimed for the
metayer, has, in some of the countries cultivated by corvees,
actually taken place in favour of the vassal, peasant, or serf.
In the German provinces of the Austrian monarchy, contracts
between the landlord and peasant are, by law, made irrevocable,
and most of the corvees have been changed into a fixed and
perpetual rent of money, or of fruits in a raw state. By this
means, the peasant has acquired a true property in his house and
land: only, it continues to be charged with rents, and some
feudal services. Still farther to protect the peasantry from
being afterwards oppressed or gradually expelled from their
properties, by the opulent lords living among them, the law does
not allow any noble to buy a vassal's land; or, if he does buy
any, he is obliged to sell it, on the same conditions, to some
other family of peasants; so that the property of the nobles can
never increase, or the agricultural population diminish.
These regulations of the Austrian government in behalf of an
order, which, if left to itself, must needs be oppressed, are
almost sufficient to redeem the errors of its general system, by
this increase of happiness to the subject, and of stability to
the system itself. In a country deprived of liberty, where the
finances have at all times been wretchedly administered, where
wars are eternal - and still disastrous, obstinacy there being
always joined with incapacity; the great mass of the population,
composed almost wholly of peasant-proprietors living in easy
circumstances, have been rendered happy; and this mass of
subjects, feeling their own happiness, and dreading every change,
have mocked all the projects of revolution or of conquest
directed against their country, the government of which is so
little able to defend itself.
The system of cultivating land by capitation, could be
adopted only among a people scarcely emerged from barbarism. It
is, in fact, nearly a modern farm-lease, the parties to which, in
fixing the rent, pay no regard to the greater or smaller extent
of the ground, to its comparative fertility or barrenness, to the
improvements which labour has already made it undergo. Be the
nature of those circumstances what it may, each proprietor of a
whole Russian province pays thirty roubles yearly to the lord of
it. Doubtless when the capitation was imposed, all those
circumstances were equal; there was more fertile land for each
than each could cultivate, and no part of it had yet been
improved by labour.
In free counties, capitation is looked upon as a degrading
tax, because it recalls the idea of servitude. It was, indeed,
originally always accompanied with servitude of the soil. The
peasant always depended on the good pleasure of his master; in
executing their mutual contact, no law afforded him protection;
he was always liable to be ejected, carried off, sold, stript of
all the property amassed by his industry; and thus the kind of
authority to which he was subject incessantly reminded him, that,
whatever he saved, he took from himself to give it to his master;
that every effort on his part was useless, every invention
dangerous, every improvement contrary to his interest, and
finally, that every sort of study but aggravated his wretchedness
by more clearly informing him of his condition.
Even in Russia, however, the disinterestedness of some noble
families, who for several generations have not changed the
capitation, has inspired the peasantry with confidence sufficient
to reanimate their industry, to infuse a taste for labour and
economy, and sometimes even to permit their realizing very large
fortunes which, however, always depend on the master's good
pleasure. But in countries where servitude of the soil has been
gradually abolished, the capitation has become a fixed rent;
united most frequently to personal services, and sometimes
reduced to mere feudal rights, as the system, by degrees, varied
from its primitive uniformity. Such was the tenure by villanage
in France, by copy-hold in England, the origin of nearly all the
property possessed by peasants cultivating their own heritages.
On the other hand, such contracts helped to produce the notion of
farm-leases, which, in the wealthiest countries of Europe, have
succeeded every other kind of convention between proprietor and
cultivator.
By a farm-lease, the proprietor yields his land, and nothing
more, to the cultivator; and demands an invariable rent for it;
whilst the farmer undertakes to direct and to execute all the
labour by himself; to furnish the cattle, the implements, and the
funds of agriculture; to sell his produce, and to pay his taxes.
The farmer takes upon him all the cares and all the gains of his
agriculture; he teats it as a commercial speculation, from which
he expects a profit proportionate to the capital employed in it.
At the time when slavery was abolished, the system of farms
could not be immediately established: freedmen could not yet
undertake such important engagements, nor were they able to
advance the labour of a year, much less that of several years,
for putting the farm in a proper condition. The master, on giving
them their liberty, would have been obliged to give them also an
establishment; to furnish them with cattle, instruments of
tillage, seed and food for a year; and after all these advances,
the farm would still have been a burdensome concern for the
owner, because by his contract he had renounced the profit of
good years on condition that his farmer should warrant him
against bad years; but the farmer who had nothing could warrant
nothing, and the master would have given up his good crops
without any return.
The first farmers were mere labourers; they executed most of
the agricultural operations with their own hands; they adjusted
their enterprises to the strength of their families; and as the
proprietor reposed little confidence in their management, he used
to regulate their procedure by numerous obligatory clauses; he
limited their leases to a few years, and kept them in a continual
state of dependence. During the last century, farmers,
particularly in England, have risen to rank and importance.
Political writers and legislators have uniformly viewed them with
a favourable eye; their leases have ceased to be limited in time
to a small number of years, and hence farmers have issued from a
more elevated class of society. With large capitals, they have
taken farms of a larger size; more extensive knowledge, and a
better education have enabled them to teat agriculture as a
science: They have applied to it several important discoveries in
chemistry and natural history; they have also in some degree
united the habits of the merchant with those of the cultivator.
The hope of a larger profit has induced them to make larger
advances; they have renounced that parsimony which originates in
want, and stands in direct opposition to enlightened economy;
they have calculated and recorded the result of their operations
with greater regularity, and this practice has furnished better
opportunities of profiting by their own experience.
On the other hand, farmers from this time have ceased to be
labourers; and below them has of course been formed a class of
men of toil, who, being entrusted with supporting the whole
nation by their labour, are the real peasants, the truly
essential part of the population. The peasantry, strengthened by
the kind of labour most natural to man, are perpetually required
for recruiting all the other classes; it is they who must defend
the country in a case of need; whom it most concerns us to attach
to the soil where they were born; and policy itself would invite
every government to render their lot happy, even though humanity
did not command it.
When the system of small farms has been compared, as is often
done, with that of great farms, it has not been sufficiently
considered that the latter, by taking the direction of his labour
out of the peasant's hands, reduces him to a condition greatly
more unhappy than almost any other system of cultivation. In
truth, hinds performing all the labours of agriculture, under the
command of a rich farmer, are not only more dependent than
metayers, but even than serfs, who pay their capitation or their
service. The latter, whatever vexations they experience, have at
least a hope, a property, and a heritage to leave their children.
But the hind has no participation in property, nothing to hope
from the fertility of the toil or the propitiousness of the
season; he plants not for his children; he entrusts not to the
ground the labour of his young years, to reap the fruit of it,
with interest, in his old age. He lives each week on the wages of
the last. Ever exposed to the want of work by derangements in his
master's fortune; ever ready to feel the extremes of want, from
sickness, accident, or even the approaches of old age, he runs
all the risks of ruin without enjoying any of the chances of
fortune. Economy in his situation is scarcely probable; but
though he should succeed in collecting a little capital, the
suppression of all intermediate ranks hinders him from putting it
to use. The distance between his lot and that of an extensive
farmer, is too great for being passed over; whereas, in the
system of cultivation on the small scale, a labourer may succeed,
by his little economy, in acquiring a small farm or a small
metairie; from this he may pass to a greater, and from that to
every thing. The same causes have suppressed all the intermediate
stages in other departments of industry. A gulf lies between the
day-labourer and every enterprise of manufacture or trade, as
well as farming; and the lower classes have now lost that help
which sustained them in a former period of civilization. Parish
aids, which are secured to the day-labourer, increase his
dependence. In such a state of suffering and disquietude, it is
not easy to preserve the feeling of human dignity, or the love of
freedom; and thus at the highest point of modern civilization,
the system of agriculture approximates to that of those corrupt
periods of ancient civilization, when the whole labour of the
field was performed by slaves.
The state of Ireland, and the convulsions to which that
unhappy country is continually exposed, show clearly enough how
important it is for the repose and security of the rich
themselves, that the agricultural class, which forms the great
majority of a nation, should enjoy conveniences, hope, and
happiness. The Irish peasants are ready to revolt, and plunge
their country into the horrors of civil war; they live each in a
miserable hut, on the produce of a few beds of potatoes, and the
milk of a cow; more unhappy, at the present day, than the
cottagers of England, though possessing a small property, of
which the latter are destitute. In return for their allotted
portion of ground, they merely engage to work by the day, at a
fixed wage, on the farm where they live; but their competition
with each other has forced them to be satisfied with a wage of
the lowest possible kind. A similar competition will act likewise
against the English cottagers. There is no equality of strength
between the day-labourer, who is starving, and the farmer, who
does not even lose the revenue of his ground, by suppressing some
of his habitual operations; and hence the result of such a
struggle between the two classes, is constantly a sacrifice of
the class which is poorer, more numerous, and better entitled to
the protection of law.
Rich proprietors generally find that for themselves large
farms are more advantageous than small ones. The small farmer
rarely employs a capital sufficient even for his little
cultivation; himself is always so near to ruin, that he must
begin by ruining the ground. And certainly, in counties where the
different systems of cultivation are practically set in
opposition to each other, it is granted that land is ruined by
letting it on lease, and reimproved by cultivating it with
servants or metayers. It is not, therefore, small farms, but
metairies, which ought to be compared with large farms.
Cultivation on the great scale, spares much time which is lost in
the other way; it causes a greater mass of work to be performed
in the same time, by a given number of men; it tends, above all,
to procure from the employment of great capitals the profit
formerly procured from the employment of numerous workmen; it
introduces the use of expensive instruments, which abridge and
facilitate the labour of man. It invents machines, in which the
wind, the fall of water, the expansion of steam, are substituted
for the power of limbs; it makes animals execute the work
formerly executed by men. It hunts the latter from trade to
trade, and concludes by rendering their existence useless. Any
saving of human strength is a prodigious advantage, in a colony,
where the supernumerary population may always be advantageously
employed. Humanity justly solicits the employment of machines to
aid the labour of the negroes, who cannot perform what is
required of them, and who used to be incessantly recruited by an
infamous commerce. But in a country where population is already
too abundant, the dismissal of more than half the field-labourers
is a serious misfortune, particularly at a time when a similar
improvement in machinery causes the dismissal of more than half
the manufacturing population of towns. The nation is nothing else
but the union of all the individuals who compose it, and the
progress of its wealth is illusory, when obtained at the price of
general wretchedness and morality.
Whilst, in England, the peasantry are hastening to
destruction, their condition is improving in France; they are
gathering strength, and without abandoning manual labour, they
enjoy a kind of affluence; they unfold their minds, and adopt,
though slowly, the discoveries of science. But in France, the
peasants are mostly proprietors: the number of those who
cultivate their own lands prodigiously increased in the
revolution; and to this cause must be attributed the rapid
progress which agriculture is making in that country, in spite of
a long war and heavy contributions. Perhaps England might partly
obtain a similar advantage, if these vast commons were shared
among her cottagers, to whom the charm of property would thus be
restored.
The most industrious provinces of France are, at this time,
experiencing the unlooked - for effects of dividing property
among its true cultivators; we mean the distribution of great
farms among the contiguous peasantry, by a great number or
particular contacts. A large proprietor now rarely gives his farm
to be cultivated by a single person; he finds it infinitely more
advantageous, at present, to share his domain among a number of
neighbouring peasants, each of whom takes as much land as is
requisite to occupy him all the year. No doubt, the peasant will
generally sacrifice the land which he farms, to that which is his
property; but both those portions are cultivated with the ardour
which a direct interest excites in the labourer and with the
intelligence which is developed in him, now that his lord can no
longer oppress him. The agricultural classes are as happy as the
political circumstances of a country, loved with enthusiasm,
permit them to be.
To conclude our review of the systems, by which territorial
wealth is incessantly renewed, we ought yet to bestow a moment of
attention on the system of emphyteuses or perpetual farms, the
most suitable of all when government has grants of land to make.
In other systems of cultivation, the agriculturist acquires
all the fruit of his annual advances, but he can never be sure of
profiting from those irredeemable advances by which a perpetual
value is added to land, from drainings, plantations, and breaking
up of the soil. Proprietors, of themselves, are seldom enabled to
make such advances. If they sell the land, the purchaser, in
order to acquire it, must surrender that very capital, with which
he might have made those improvements. The lease of emphyteusis
or plantation, which is the proper meaning of the word, was thus
a very useful invention, as by it the cultivator engaged to break
up a desert, on condition of acquiring the dominium utile of it
for ever, whilst the proprietor reserved for himself an
invariable rent to represent the dominium directum. No expedient
could more happily combine, in the same individual, affection for
property, with zeal for cultivation; or more usefully employ, in
improving land, the capital destined to break it up. Although
this kind of lease is known in England under the name of freehold
for many lives; and though it is even of great importance in this
kingdom, as the right of voting in county elections depends upon
it, its beneficial influence has chiefly been experienced in
Italy, where it is named livello. In the latter country, it has
restored to the most brilliant state of cultivation whole
provinces, which had been allowed to run waste. It cannot,
however, become a universal mode of cultivation, because it
deprives the direct proprietor of all the enjoyment of property,
exposing him to all the inconveniences, with none of the
advantages, in the condition of the capitalist; and because the
father of a family can never be looked upon as prudent or
economical, when he thus alienates his property for ever, without
at least retaining the disposal of the price to be received in
exchange for it.
For re-producing territorial wealth, it is sufficient, in
general, that the use of the ground be transmitted to the
industrious man, who may turn it to advantage, whilst the
property of it continues with the rich man, who has no longer the
same incitements or the same fitness for labour, and who thinks
only of enjoyment. The national interest, however. sometimes also
requires that property itself shall pass into hands likely to
make a better use of it. It is not for themselves alone that the
rich elicit the fruits of the earth; it is for the whole nation;
and if, by a derangement in their fortune, they suspend the
productive power of the country, it concerns the whole nation to
put their property under different managers. Personal interest
is, indeed, sufficient to bring about this transmission, provided
the law offers no obstacle. When a soldier comes to inherit a
machine for making stockings, he does not keep it long; in his
hands, the machine is useless for himself and the nation; in the
hands of a stocking-maker it would be productive, both for the
nation and the individual. Both feel this; and a bargain is soon
struck. The soldier receives money, which he well knows how to
employ; the stocking-maker receives possession of his frame, and
production recommences. Most of our European laws respecting
immovable property, are like a law made to hinder the soldier
from parting with the frame, of whose use he is ignorant.
The value of land cannot be unfolded, except by employing a
capital sufficient to procure the accumulation of that labour
which improves it. Hence, it is essential to the very existence
of a nation that its land be always in the hands of those who can
devote capital to its cultivation. If it were not in any case
allowed to sell a workman's implement, it would not, certainly,
at least, be forbidden to make new ones for the use of new
workmen; but new lands cannot be made, and so often as the law
prevents the alienation of an estate by one that cannot use it,
so often does it suspend the most essential of all productions.
The systems of cultivation, which we have now glanced over in
review, certainly cause the earth to produce, by the hands of
temporary cultivators, when the permanent advances have been
made; but they absolutely discourage such cultivators from making
those permanent advances which, as they give a perpetual value to
property, cannot be laid out except by those with whom that
property is destined to continue. Legislators in general,
altogether occupied with preventing the alienation of immovables,
and preserving great fortunes in great families, have dreaded
lest such an alienation might clandestinely be brought about by a
lease, for a long term, and without return. They have eagerly
attempted to defend the rights of proprietors against proprietors
themselves; they have guided that class of people by forfeits and
resolutory clauses; they have fixed upon a short term for farm
leases; they seem continually repeating to the cultivator: "This
land, on which you work, is not yours; acquire not too much
affection for it; make no advances which you might run the risk
of losing; improve the present moment, if you can, but think not
of the future; above all, beware of labouring for posterity."
Besides, independently of legislative errors, it belongs to
the very nature of a farm lease never to allow the farmer to take
as much interest in the land as its proprietor. It is enough that
this lease must have an end, to induce the farmer, as this end
approaches, to care less about his fields, and to cease laying
out money for improving them. The metayer, with smaller power, at
least never fears to improve the land committed to him as much as
possible; because the conditions of his lease are invariable, and
he is never dismissed except for bad behaviour. The farmer,
again, is liable to be dismissed directly in consequence of his
good management. The more he has improved his farm, the more will
his landlord, at renewing the lease, be disposed to require an
augmentation of rent; and, besides, as part nf the advances laid
out by the cultivator, on the ground, create a perpetual value,
it is neither just nor natural that they should be made by one
whose interest is merely temporary. The farmer will carefully
attend to the fields and meadows, which, in a few years, are to
give him back all his advances; but he will plant few orchards;
few high forests in the north; few vineyards in the south; he
will make few canals for navigation, irrigation, or draining; he
will transport little soil from one place to another; he will
clear little ground; he will execute, in short, few of those
works which are most conducive to the public interest, because
they found the wealth of posterity.
None of those labours, on which the increase of the whole
national subsistence depends, can be undertaken, save by a
proprietor, rich in movable capital. It is not the preservation
of great fortunes that concerns the nation, but the union of
territorial fortunes with circulating ones. The fields do not
flourish in the hands of those who have already too much wealth
to watch over them, but in the hands of those who have enough of
money to bring them into value. Territorial legislation ought,
therefore, without ceasing, to strive that movable capital be
united with fixed; property which we call personal with property
which we call real. Legislation, over almost all the world, has
striven to do quite the contrary.
And first, it were always for the national advantage, and
favourable to the increase of its production, that the
proprietor, whenever his fortune is embarrassed, should sell his
property, instead of borrowing on it; yet, on the contrary,
facilities have been held out to him for borrowing, rather than
for sale. A particular system of law has been created for
territorial debts; marked differences have been established
between real and personal property; the rank of creditors on land
has been regulated according to their date, whilst an absolute
equality prevails among creditors of all dates, who claim only on
movable property. And thus thousands of law-suits have been
created, interminable difficulties have been started, and the
time is almost come when half the lands of Europe are possessed
by a people who far from possessing the power to dispose of a
capital that might increase their productiveness, on the
contrary, are debtors by a pretty large capital, which they
cannot extract from those funds. Hence those embarrassed
proprietors have incessantly had recourse to ruinous expedients
not to put money on their lands, but to take it off; to borrow of
their farmers, to diminish the funds of cultivation, to sell
their woods, and deteriorate their estates. If the law had given
no preference to territorial creditors; if, on the other hand it
had given as much facility to a creditor for selling an immovable
property, as for making seizure of a movable one; especially, if,
in protecting personal liberty, sacrificed too slightly, it had
permitted lands to be sold as often as it now permits the debtor
to be put in prison - most old debts would be extinguished, and
those immovable possessions, which ought to support the nation,
would be in the hands of such as could force them, by capital and
labour, to furnish the means of subsistence.
But the props lent to the pride of family by entails,
fideicommissa, primogenitures, and the laws invented to hinder
families in a ruinous condition from selling their property, have
still further impeded the development of agriculture and
industry. The legislator aimed at fixing fortune in great
families: he has fixed beggary and want in them. On pretext of
securing the patrimony of children, he has forbidden the heir of
entail to sell or borrow with a sufficient security to his
creditors; but he could not hinder him from going to ruin, and
overwhelming himself with clamorous debts. In that case, even the
care of his honour, the feeling of justice, and his own security,
oblige him to employ all the resources of his mind, all his
industry in destroying his patrimony, that he may obtain the
disposal of what law has reserved to his heir. Whatever produce
he can detach from the ground without replacing it, whatever
advance he can dispense with laying out, is, in his eyes, just so
much profit; and Europe has come to see the proprietors of noble
estates, almost everywhere, the enemies of their property. At the
same time, if the legislator's object was the preservation of
families, he has failed in this object; because entails condemn
all the sons of a rich family to idleness; the elder out of
pride, the younger out of inability. The system has proscribed
all from industry, the sole mean of increasing property; whilst
it leaves them subject to all human chances, which never cease to
attack whatever is ancient, and which must always, in the end,
destroy whatever opulence is not renewed.
Chapter 4
Of Commercial Wealth
By labour man drew his first wealth from the earth, but
scarcely had he satisfied his primitive wants, when desire made
him conceive other enjoyments, not to be obtained without the aid
of his fellows. Exchanges began. They extended to whatever had
any value, to whatever could produce any; they comprised mutual
services and labour, no less than the fruit of labour; and gave
room to the formation and increase of a new kind of wealth, which
was no longer measured by the wants of him who produced it, but
by the wants of all those with whom he might transact exchanges,
- with whom he might carry on commerce; and hence we have named
it commercial wealth.
The solitary man was used to labour for his own wants, and
his consumption was the measure of his production; he fitted out
a place to produce him provisions for a year, for two years
perhaps; but afterwards he did not indefinitely augment it. It
was enough to renew the process, so as to maintain himself in the
same condition; and, if he had time to spare, he laboured at
acquiring some new enjoyment, at satisfying some other fancy.
Society has never done any thing by commerce, except sharing
among all its members what the isolated man would have prepared
solely for himself. Each labours, in like manner, to provide for
all, during a year, two years, or more; each labours, afterwards,
to keep up this provision, according as consumption destroys a
part of it; and since the division of labour and the improvement
of arts allow more and more work to be done, each, perceiving
that he has already provided for the reproduction of what has
been consumed, studies to awaken new tastes and new fancies which
he may satisfy.
But when a man laboured for himself alone, he never dreamt of
those fancies, till he had provided for his wants; his time was
his revenue; his time formed also his whole means of production.
There was no room to fear, that the one would not be exactly
proportioned to the other; that he would ever work to satisfy an
inclination that he did not feel, or which he valued less than a
want. But when trade was introduced, and each no longer laboured
for himself, but for an unknown person, the different proportions
subsisting between the desire and what could satisfy it, between
the labour and the revenue, between production and consumption,
were no longer equally certain; they were independent of each
other, and every workman was obliged to regulate his conduct by
guessing on a subject, concerning which the most skilful had
nothing but conjectural information.
The isolated man's knowledge of his own means and his own
wants, required to be replaced by a knowledge of the market, for
which the social man was labouring; of its demands and its
extent.
The number of consumers, their tastes, the extent of their
consumption, and their income, regulate the market for which
every producer labours. Each of these four elements is variable,
independently of the rest, and each of their variations
accelerates or retards the sale. The number of consumers may
decrease, not only by sickness or war, but also by obstacles
which policy may place in the way of their communication, or by
the avarice of new sellers. Their tastes may be changed by
fashion: an extraordinary consumption of one kind of merchandize,
brought about by some public calamity, may have reduced them to
be frugal in all the rest; and finally, their income may diminish
without a diminution of their number, and with the same wants,
the same means of satisfying them may no longer exist. Such
revolutions in the market are difficult to know with precision,
difficult to calculate; and their obscurity is greater for each
individual producer, because he but imperfectly knows the number
and means of his rivals, the merchants, who are to sell in
competition with him. But one single observation serves him,
instead of all them: he compares his price with that of the
buyer, and this comparison, according to the profit or loss which
it offers him, is a warning to increase or diminish his
production, for the following year.
The producer establishes his price according to what the
merchandise has cost, including his profit, which ought to be
proportional to what might be obtained in any other kind of
industry. The price must be sufficient to repay the workmen's
wages, the rent of the land, or the interest on the fixed
capitals employed in production, the raw materials wrought by
him, with all the expenses of transport, and all the advances of
money. When all these reimbursements, calculated at the mean rate
of the country, are themselves repaid by the last purchaser, the
production may continue on the same footing. If the profits rise
above the mean rate, the producer will extend his enterprizes; he
will employ new hands and fresh capital, and, striving to benefit
by this extraordinary profit, he will soon reduce it to the
common level. If the buyer, on the other hand, pays a price too
low for compensating all the producer's reimbursements, the
latter will, of course, seek to reduce his production, but this
change will not be so easy as the other. The workmen employed by
him, rather than abandon what gains their bread, consent to work
at a lower price; for less even than the necessaries of life.
Fixed capitals, moreover, cannot be put to another use; he will
content himself with a smaller profit, and continue to work with
them till they produce next to nothing. Lastly, the manufacturer
himself must live by his industry, and never willingly abandons
it: he is ever disposed to attribute the decline of his last
year's trade to accidental causes; and the less he has gained,
the less is he willing to retire from business. Thus production
continues almost always longer than demand, unless the
manufacturer has, of his own accord, renounced his business to
attempt a new one.
The buyer's price, an the other hand, is fixed by
competition. He does not inquire what the article costs, but what
are the terms on which he may obtain another to serve in its
stead; he addresses himself to various merchants, who offer him
the same commodity, and bargains with him who will sell the
cheapest; or else he considers which will suit him best, among
several articles of a different nature, but capable of being
substituted for each other. As each is occupied solely with his
own private interest, each tends to the same object: all the
buyers, on one hand, all the sellers on the other, act as if in
concert: the sums asked, and the sums offered, are brought to an
equilibrium, and the mean price is established.
The seller's price should enable him to reproduce the article
sold, with a profit, under the same condition, in the same place.
His market, therefore, extends to every country where the mean
price established by commerce is no smaller than his. His
production is not limited by the consumption of neighbors or
countrymen; it is regulated by the whole number of those who,
whatever country they inhabit, find an advantage in purchasing
his goods, or for whom his producing price is not superior to the
buying price. It is this which properly constitutes the extent of
market.
As the division of labour incessantly augments its productive
powers, and the increase of capitals daily obliges the merchant
to seek new employment for industry, and try new manufactures,
the producer feels no interest more pressing than that of
extending his market. If he cannot find new places of sale, it
will neither suit him to enlarge his manufactory, when his
capital has been increased by saving, nor to improve his
fabrication by performing more work with the same machinery, or
the same number of hands. The whole progress of his fortune
depends on the progress of his sale.*
Among the causes which augment this sale, the first is the
discovery of such an economy in labour as may enable the
manufacturer to sell cheaper than his brethren, and to get
possession of their custom: he will sell more, but they will sell
less. The consumers will make a light saving; yet, if both are
subjects of the same state, the difference in regard to the
national interest will not be great. The distress of those
producers, who have lost their custom, and who, probably, will
lose a considerable part of their capital by selling their wares
too cheap, and abandoning their former machinery, will perhaps
counterbalance the profit of purchasers.
As policy is wont to comprise the obligation of social duties
within the circle of our countrymen, the mutual rivalship of
foreign producers has more openly displayed itself. They have
striven to exclude each other from the markets, where they came
in competition, by selling at a cheaper rate. Every national
discovery, which allows the producers of one country to sell
cheaper than those of other countries, inevitably increases the
former's production at the latter's expense; and the profit of
this saving is shared between producers who extend their market,
and consumers who provide for their wants at a smaller expense.
Yet if a single manufacturer has succeeded in making this saving,
which extends his market; or if the exclusive use of it is
secured to him by patent, his countrymen. also manufacturers,
against whom he has made this successful competition, must
support all the loss of it, whilst himself and the foreign
consumer share all the profit. In an age, when communication
among different counties is easy, when all the sciences are
applied to all the arts, discoveries are soon divined and copied,
and a nation cannot long retain an advantage in manufacturing
which it owes but to a secret; so that the market, extended for a
moment by a fall in the price, is very soon shut up; and if the
general consumption is not increased, the production is not so
either.
Sale is extended also, and in a more lasting manner, when the
cheapness of the thing produced brings it within the reach of a
new class of consumers; a very sensible diminution of the price
may often produce this effect. Thus glass windows were at one
time confined to palaces; they are found at the present time in
the meanest huts. Consumption is in that case truly increased;
each nation gains doubly by it; manufacturers have extended their
labour; the poor have acquired a new enjoyment.
The increase of population, and of national wealth,
contributes to extend the market, in a manner still more
advantageous. Yet every conceivable increase of population and of
wealth, does not, of necessity, extend the market; it is only
such an increase as attends the increased comforts of the most
numerous class. When cultivation on the great scale has succeeded
cultivation on the small, more capital is perhaps absorbed by
land, and re-produced by it; more wealth than formerly may be
diffused among the whole mass of agriculturists, but the
consumption of one rich farmer's family, united to that of fifty
families of miserable hinds, is not so valuable for the nation,
as that of fifty families of peasants, no one of which was rich,
but none deprived of an honest competence. So also in towns, the
consumption of a manufacturer worth a million, under whose orders
are employed a thousand workmen, reduced to the bare necessaries
of life, is not so advantageous for the nation, as that of a
hundred manufacturers far less rich, who employ each but ten
workmen far less poor. It is very true, that ten thousand pounds
of income, whether they belong to a single man, or to a hundred,
are all equally destined for consumption, but this consumption is
not of the same nature. A man, however rich, cannot employ for
his use an infinitely greater number of articles than a poor man,
but he employs articles infinitely better; he requires work far
better finished, materials far more precious, and brought from a
far greater distance. It is he who especially encourages the
perfection of certain workmen, that finish a small number of
objects with extreme skill; it is he who pays them an exorbitant
wage. It is he also that especially rewards such workmen as we
have named unproductive, because they procure for him nothing but
fugitive enjoyments, which can never by accumulation form part of
the national wealth; and whilst the effect of increasing capital
is generally to concentrate labour in very large manufactories,
the effect of great opulence is almost entirely to exclude the
produce of those large manufactories from the consumption of the
opulent man. The diffusion of wealth, therefore, still more than
its accumulation, truly constitutes national prosperity, because
it keeps up the kind of consumption most favourable for national
re-production.
The manufacturer's market may, in the last place, be
extended, by what forms the noblest wish of a statesman, the
progress of civilization, comfort, security, and happiness, among
barbarous nations. Europe has arrived at such a point, that, in
all its parts, there is to be found an industry, a quantity of
fabrication, superior to its wants; but if false policy did not
incessantly induce us to arrest the progress of civilization
among our neighbours; if Egypt had been left in the hands of a
people requiring the arts of Europe; if Turkey were extricated
from the oppression under which it groans; if our victories over
the inhabitants of Barbary had been profitably employed in giving
back the coasts of Africa to social life; if Spain had not again
been yielded to a despotism which destroys and ruins her
population; if the independents of America were protected, so
that they might be allowed to enjoy the advantages which nature
offers them; if the Hindoos, subject to Europe, were amalgamated
with Europeans; if Franks were encouraged to settle among them,
in place of being repelled, - consumption would increase in these
different counties, rapidly enough to employ all this
super-abundant labour, which Europe at present knows not how to
dispose of, and to terminate this distress in which the poor are
plunged.
The more superior the buyer's price is to the seller's, the
more profit does trade give to be shared among the trader, and
all those whom he employs in the transport and distribution of
his goods; the manufacturer, and all those whom he employs in the
production of them. Hence one of the great and constant objects
of governments has been, to increase this difference, that their
manufacturers might be enabled to produce cheap, and so find many
buyers, and to sell dear to such as could not buy elsewhere, and
so gain a large profit. The progress of society generally enables
nations to produce cheaper; the almost ever injudicious
protection of government often gives them means of selling
dearer.
The low price of workmanship is the first cause of
manufacturing profit; but this low price is never a national
advantage, except when it is produced by superiority of climate,
greater fertility of soil, or abundance of provision. On the
contrary, when it arises from the difficulty of communication,
which prevents cultivators from reaping all the profit of their
wares, it can only be regarded as a private advantage, acquired
at the expense of the national advantage. When the low price of
workmanship arises from the poverty of day-labourers, forced by
competition to content themselves with what is necessary for
life; though commerce may profit by the circumstance, it is
nothing better than a national calamity.
Abundance of capital, and the consequence of this, a low
price of interest, likewise doubly contribute to diminish the
price of production. With more capital, the manufacturer and
merchant transact their purchases and sales at a more favourable
moment; they are not pressed by either operation, or compelled to
provide for the print by a sacrifice of future advantage.
Executing all kinds of labour more on the great scale, they save
time, and all those incidental charges, which are the same for a
great and for a small sum. But as to the saving made by the
merchant on the interest of money, it is made at the expense of a
particular class, deriving their revenue from trade; it does not
enrich the nation any more than the diminution of wages enriched
it; it only gives to one what it takes from another.
The increasing division of labour forms, as we have seen, the
chief cause of increase in its productive powers; each makes
better what he is constantly engaged in making, and when, at
length, his whole labour is reduced to the simplest operation, he
comes to perform it with such ease and rapidity, that the eye
cannot make us comprehend how the address of man should arrive at
such precision and promptitude. Often also this division leads to
the discovery, that as the workman is now worth nothing more than
a machine, a machine may in fact supply his place. Several
important inventions in mechanics applied to the arts, have thus
sprung from the division of labour; but, by the influence of this
division, man has lost in intelligence all that he has gained in
the power of producing wealth.
It is by the variety of its operations that our soul is
unfolded; it is to procure citizens that a nation wishes to have
men, not to procure machines At for operations a little more
complicated than those performed by fire or water. The division
of labour has conferred a value on operations so simple, that
children, from the tenderest age, are capable of executing them;
and children, before having developed any of their faculties,
before having experienced any enjoyment of life, are accordingly
condemned to put a wheel in motion, to turn a spindle, to empty a
bobbin. More lace, more pins, more threads, and cloth of cotton
or silk, are the fruit of this great division of labour; but how
dearly have we purchased them, if it is by this moral sacrifice
of so many millions of human beings!
The employment of machinery in place of men, has contributed
generally to lessen the price of production. At the renovation of
arts and civilization, there was so much work to be done, and so
few hands to do it; oppression had so far reduced the poor class;
there remained so much uncultivated land in the country; so many
ill-supplied trades in towns; and sovereigns required so many
soldiers for war, that it seemed workmanship could never be
economized enough, since an artisan, sent away from one trade,
would always find ten others ready to receive him. Circumstances
are not now the same; our labour is scarcely sufficient for the
labourers. We shall endeavour, in another place, to explain the
cause of this fact; in the mean time, surely none will maintain
that it can be advantageous to substitute a machine for a man, if
this man cannot find work elsewhere; or that it is not better to
have the population composed of citizens than of steam-engines,
even though the cotton cloth of the first should be a little
dearer than that of the second.
The application of science to art is not limited to the
invention of machinery; its result is the discovery of raw
materials, dyeing ingredients, preservative methods more sure and
economical. It has produced better work at a cheaper rate; it has
protected the health of labourers, as well as their produce; and
its effect in augmenting wealth has almost always been beneficial
to humanity.
Finally, the different quarters of the globe possess
advantages of climate, soil, exposure, which not only render the
subsistence of man more easy or cheaper, but also place within
his reach certain raw materials, which other nations cannot
procure at the same price. Hence results in their favour a kind
of monopoly, which they exercise over others, and of which it is
rare that they do not take advantage. There is also, in some
degree, a natural advantage in the superiority of the people
itself, in certain climates; the bounty of nature seems to have
reserved for those who inhabit them a superiority of industry,
intelligence, strength of body, or constancy in labour, which do
not even require to be developed by education.
But other qualities, other virtues, which appear to
contribute more effectually still to the increase of riches, as
well as to the happiness of society - the love of order, economy,
sobriety, justice - are almost always the work of public
institutions. Religion, education, government, and principles of
honour, change the nature of men; and as they make good or bad
citizens of them, they advance or retard their approach to the
object proposed by political economy.
But governments have rarely been satisfied with such
advantages as the trade of their states might owe to nature, or
to the progress of society. They have attempted to favour the
increase of commercial wealth; and their different expedients
have most frequently tended to assist the merchant in selling
dear, rather than producing cheap. With the latter object,
however, we have seen the exportation of raw materials
prohibited, the rate of interest fixed, and laws enacted to lower
the wages of labour.
These three expedients had a common fault, that of
sacrificing one class to another, and founding the profit of
trade, not on the advantage of consumers, but on the loss of
cultivators, capitalists, or workmen; so that its profits, far
from being an increase of the national wealth, were a
displacement of it. The raw materials on which the arts operate,
are all, or nearly all, produced by agriculture or at least drawn
from the ground; hence they form part of the proprietor's or the
cultivator's wealth. If some advantage did not arise from
exporting them, nobody would think of forbidding them to be
exported. This prohibition indicates sufficiently, that the
persons who produced them were better paid, or gained more by
selling them to strangers; and the law restricts their market, in
opposition to the principle which we have pointed out above, as
the foundation of commercial interest; the principle of obtaining
for each article of produce the highest possible price. From such
prohibitions to export, there must result, first, a diminution in
the price of the raw material, for its price is no longer kept up
by free trade; secondly, a diminution in the quantity produced,
because it is regulated by the interior demand; and lastly, a
deterioration of its quality, for a calling which is ill
rewarded, is likewise ill attended to. This, therefore, is one of
the most injudicious means of favouring trade; and at the same
time, it sacrifices the income of all those who contribute to
produce the raw material. Whatever trade gains from them, cannot
be considered as adding aught to the national revenue.
To fix the interest of money, or to suppress it altogether,
as some legislators have attempted, has, generally been the
consequence of religious prejudices, and of mad attempts to adapt
the Jewish legislation to modern Europe. The effect of these
laws, so opposite to the general interest, has always been either
to force contractors to envelop themselves in a secrecy which
they must require payment for, and may use as a snare for the
unsuspiciousness of others; or else to force capitalists to
employ, in other counties, that capital which they could not lend
in their own neighborhood, with the same safety and advantage.
But the very end which legislators proposed was bad; a diminution
in the rent of the national capital, is a national evil; it is a
loss of part of the revenue. Most frequently, indeed, this evil
is the sign of an advantage greatly superior to it, namely, the
increase of capitals themselves; but, in forcibly producing the
sign, we cannot at all forcibly produce the thing, any more than
by turning round the pointers of a watch we can alter the flight
of time.
Attempts on the part of government to fix the rate of wages,
to make workmen labour at a lower price, are ever the most
impolitic and the most unjust of these partial laws. If
government should propose, as an object, the advantage of any one
class in the nation at the expense of the rest, this class ought
to be precisely the class of day-labourers. They are more
numerous than any other; and to secure their happiness is to make
the greatest portion of the nation happy. They have fewer
enjoyments than any other; they obtain less advantage than any
other from the constitution of society; they produce wealth, and
themselves obtain scarcely any share of it. Obliged to struggle
for subsistence with their employers, they are not a match for
them in strength. Masters and workmen are indeed mutually
necessary to each other; but the necessity weighs daily on the
workman; it allows respite to his master. The first must work
that he may live, the second may wait and live for a time without
employing workmen. Hence in the riots and combinations of workmen
for obtaining an increase of wages, their conduct is often
violent and tumultuous, and often merits the chastisement which
it never fails to receive; but scarcely an instance exists, where
justice has not been upon their side.
The expedients invented by governments to assist their
merchants in selling dear, are numerous. Some tend to diminish
the number of producers in a market of given extent, and
therefore to force buyers to raise their price; such are
apprenticeships, corporations, monopolies granted to companies,
prohibitions to import, exclusive governments of colonies, and
favours obtained by treaties of commerce; others, such as
bounties and drawbacks, are destined really to extend the market;
though, by securing to the manufacturer a profit at the
government's expense, not the consumer's.
The regulations of apprenticeships and the statutes of
corporations, were destined, it is said, to hinder ignorant
workmen from following any trade which they did not yet
understand; they were forced to devote a determinate number of
years to learn it, and afterwards to gain admission into a body
which always made obstacles to the entrance of new comers, and
limited their number. The pretence of thus watching over the
training of artisans cannot be made good. It has often been
proved, that rivalship alone gives that training, whilst a long
apprenticeship blunts the mind and discourages industry; but the
true, though secret object, to diminish the number of those
exercising a trade, was attained. The corporate body exercised a
kind of monopoly against the consumer; it took care at all times
to keep the supply below the demand. The merchant doubtless
gained more; but he gained on a smaller production. There was
less work done, less increase of capital, less population
supported; and as to the merchant's extraordinary profit, it was
compensated by an equal loss to the consumer, who was obliged to
pay, not according to his own advantage or convenience, but
according to the arbitrary caprice of a corporation which gave
laws to him.
In all trading counties, a more or less exclusive monopoly
has been granted, on certain occasions, to some associations of
merchants, under the name of Trading Companies. The avowed motive
for sacrificing the whole class to this privileged number was the
particular nature of the trade thus subjected to a monopoly,
which trade it was said could not be supported except by very
extensive funds; but governments had often a secret motive
besides; and this was, the sum of money for which the merchants
bought their privilege. A company's monopoly has never failed to
heighten the price for the consumer, to diminish production and
consumption, to give the national capital a false direction;
sometimes by attracting it prematurely to a branch of trade which
was not yet suitable, sometimes by repelling it when fruitlessly
seeking an employment. But although companies obtained the
desired privilege of buying cheap and selling dear, by nature
they are so ill suited for economy and trading speculations, that
although amazingly rich, and sometimes sovereigns of counties,
these companies, their administrators having no immediate
interest in the prosperity of their trust, have almost all been
robbed, and very few of them have not ended in bankruptcy.
These different expedients for the protection of commerce,
are now generally decried, though almost all governments yet
agree in repelling from their states the produce of foreign
manufactories, or at least in loading it with heavy duties, to
give the national produce an advantage. The prohibitive system of
custom-house duties plainly gives to a growing manufactory an
advantage equivalent to the largest bounty. Perhaps this
manufactory scarcely produces the hundredth part of what the
nation consumes of such commodities; but the hundred purchasers
must compete with each other to obtain the one seller's
preference, and the ninety-nine rejected by him will be compelled
to obtain goods by smuggling. In this case, the nation's loss
will be as a hundred; its gain as one. Whatever advantage may
arise from giving a new manufacture to a nation, certainly there
are few which deserve such a sacrifice and even these might
always be set a-going by less expensive means. Besides, we must
also take into account the weighty inconveniences of establishing
the vexatious system of duties, of covering the frontiers with an
army of customhouse officers, and with another not less dangerous
army of smugglers, and thus of training the subjects to
disobedience. We must remember, above all, that it is not the
interest of a nation to produce every thing indifferently; that
it ought to confine its efforts to such goods or commodities as
it can manufacture at the cheapest rate; or to such as, whatever
price they cost, are essential to its safety. It ought to be
recollected that each merchant knows his own business better than
government can do; that the whole nation's productive power is
limited; that in a given time, it has but a given number of
hands, and a given quantity of capital; that by forcing it to
enter upon a kind of work which it did not previously execute, we
almost always at the same time force it to abandon a kind of work
which it did execute: whilst the most probable result of such a
change is the abandonment of a more lucrative manufacture for
another which is less so, and which personal interest had
designedly overlooked.
If the prohibitive system gives a very powerful, though very
expensive encouragement to rising manufactures, it can offer, in
regard to such, no advantage to those which are already
prosperous; the sacrifice at least which it imposes on consumers,
is entirely useless. If the manufacture was destined for
exportation, government, by granting a monopoly of the interior
market, causes it to abandon its ancient habits to assume others
which probably are less advantageous. Every manufacture destined
for exportation gives proof of not fearing the competition of
foreigners. From the moment that it can support competition
abroad, notwithstanding the expense of transport, it has still
less reason to dread this competition in the very place of
production. Thus nothing is more common than to see goods
prohibited which never could have been imported with advantage,
and which gained credit solely by being so prohibited.
By the prohibitive system, governments had proposed to
increase the number and productive powers of their manufactures.
It is doubtful if they rightly knew the price they paid for this
advantage, and the prodigious sacrifices they imposed on
consumers, their subjects, to bring into existence an unborn
class of producers; but they succeeded much more rapidly even
than speculators on political economy expected. For a time they
excited the bitterest complaints on the part of consumers; but
even these complaints ceased afterwards, because sacrifices in
fact had also ceased, and manufactures so powerfully encouraged,
had soon provided with profusion for the national wants. But this
emulation of all governments to establish manufactures every
where, has produced two strange and unexpected effects on the
commercial system of Europe; one is the disproportionate increase
of production without any relation to consumption; the other is
the effort of each nation to live isolated, to suffice for
itself, and refuse every kind of foreign trade.
Before governments had been seized with this manufacturing
ardour, the establishment of a new manufacture had always to
struggle with a crowd of national habits and prejudices, which
form as it were the vis inertiae of the human mind. To overcome
this force, it was necessary to offer speculators a very manifest
advantage; hence a new species of industry could scarcely arise
without a distinct previous demand, and the market was always
found before the manufacture destined to occupy it. Governments,
in their zeal, have not proceeded upon this principle; they have
ordered stockings and hats beforehand, reckoning that legs and
heads would be found afterwards. They have seen their people well
and economically clothed by strangers, and yet have caused them
to produce clothes in the country itself. During war, this new
production was not capable of being too exactly appreciated; but
when peace came, it was found that all things had been made in
double quantity; and the readier the mutual communication of
states had become, the more embarrassed were they to dispose of
all their works executed without orders.
Consumers who at the beginning had been satisfied, afterwards
found themselves called to unexpected gains, because merchants,
eager to recover their funds, were forced to sell a very great
quantity of goods with loss. Manufacturers gave the signal for
these sacrifices; resigning themselves to a cruel loss of their
capital, they induced extensive merchants to furnish themselves
with goods beyond their custom or ability, in order to profit by
what appeared a good opportunity. Several of the latter have been
forced to experience a similar loss, before their excessive
supply could be introduced to the shops of retail dealers; and
these again before they could make them be accepted by consumers.
A universal embarrassment was felt by manufacturers, merchants,
and retailers, and this was followed by the annihilation of the
capital destined to support industry. The fruit of long saving
and long labour was lost in a year. Consumers have gained
certainly, but their gain is scarcely perceptible even to
themselves. By laying up a stock of goods for several years to
profit by their cheapness, they have also included themselves in
the general embarrassment, and still farther retarded the period
when the balance can be re-established between consumption and
production.
According to the former organization of Europe, all states
did not make pretences to all kinds of industry. Some had
attached themselves to agriculture, others to navigation, others
to manufactures; and the condition of these latter, even in
prosperous times, could not have appeared so worthy of envy as to
demand prodigious efforts to attain it. A miserable and degraded
population almost always produced these rich stuffs; these
elegant ornaments, this furniture which it was never destined to
enjoy and if the men who directed these unhappy workmen sometimes
raised immense fortunes, those fortunes were as frequently
destroyed. The development of nations proceeds naturally in all
directions; it is scarcely ever prudent to obstruct it, but it is
no less dangerous to hasten it; and the governments of Europe, by
having of all hands attempted to force nations, are at the
present day loaded with a population, which they have created by
requiring superfluous labour, and which they know not how to save
from the horrors of famine.
The existence of this manufacturing population, and the duty
of providing for its wants, have constrained governments to alter
the aim of their legislation. Formerly, in the real spirit of the
mercantile system, they encouraged manufactures, in order to sell
much to foreigners, and grow rich at their expense; now,
perceiving that a prohibitive system is every where adopted, or
like to be adopted, they cannot any longer count on the custom of
strangers, and therefore study to find, in their own kingdom,
consumers for their own workmen; in other words, to become
isolated and sufficient for themselves. The system of policy at
present, more or less strictly followed by all the nations of
Europe, destroys all the advantages of commerce; it hinders each
nation from profiting by the superiorities due to its climate, to
its soil, to its situation, to the peculiar character of its
people; it arms man against man, and breaks the tie which was
destined to sooth national prejudices, and accelerate the
civilization of the world.
According to the natural progress of increasing wealth, when
capitals are yet inconsiderable, it is certainly desirable to
direct them rather to some neighbouring branch of trade, than to
one which is very remote; and as the trade of exportation and
importation gives foreigners one half of its profit, and the
natives another, a country which has little capital may desire to
employ it entirely in the trade of its interior, or for its own
use; and the more so, because if the market is near the producer,
the same capital will be several times renewed in a given period,
whilst another capital, destined for a foreign market, will
scarcely accomplish a single renewal. But the capitalist's
interest will always direct him with certainty, in such cases to
do what suits the country best; because his profit is
proportioned to the need there is of it, and consequently to the
direction in which the public demand carries him.
Besides, nations, on reckoning up their produce and their
wants, almost constantly forget that neighboring foreigners are
much more convenient and more advantageous producers and
consumers than distant countrymen. The relation of markets on the
two banks of the Rhine is much more important, both for the
German and the French merchant, than the relation of markets
between the Palatinate and Brandenburgh is for the former, or
between Alsace and Provence for the latter.
The ardour, with which all governments have excited every
species of production, by means of their restrictive system, has
brought about such a disproportion between labour and demand,
that perhaps it has become necessary for every state to think
first, not of the comfort, but of the existence of its subjects,
and to maintain those barriers which have been so imprudently
erected. An important part of the population might, perhaps, be
cut off by penury, in the course of a few years; and it is
reasonable that each state should seek to preserve itself and
those depending on it from such a calamity. Yet, we cannot
without pain, behold the rivetting of this anti-social system,
and the abandonment of that ancient spirit of commerce, which
triumphed over barbarism, and taught hostile hordes to know and
esteem each other.
Governments, after having attempted to give the national
producers a monopoly in their own country, have sometimes
endeavoured to procure them a similar advantage in foreign
countries, by treaties of commerce. Such actions, always
subordinate to policy, granted to a favoured nation an exemption
from some part of the duties required from others, on
consideration of some reciprocal advantage. It cannot be doubted
that such an exemption was advantageous to the nation in whose
favour it was granted; but, on the other hand, it was just as
disadvantageous to the nation granting it; and when a treaty of
commerce bore a concession of mutual exemption, each state should
have discovered, that a monopoly granted to its producers was too
dearly purchased by a monopoly granted to foreigners, against its
consumers: and the more so, as there existed no kind of relation
between the two favoured branches of trade. Some show of reason
may be discovered, why the consumers of cloth should be taxed for
the advantage of cloth manufacturers; but there is no shallow of
reason why the consumers of wine in England should experience a
loss, in compensation for an advantage to the sellers of goods in
Portugal.
No treaty of commerce can fully satisfy the greediness of
merchants desiring a monopoly; and therefore governments invented
the fanatic expedient of creating in a colony a nation expressly
to be purchasers from their merchants. The colonists were
prohibited from establishing any manufacture at home, that so
they might be more dependent on the mother country. They were
carefully prevented from following any species of foreign trade;
they were subjected to regulations the most vexatious, and
contrary to their own interests; not for the mother country's
good, but for the good of a small number of merchants. The
infinite advantages attached to a new country, where every kind
of labour is profitable, because every thing is yet to do,
enabled colonies to prosper, although they were continually
sacrificed. As their raw produce was fit for a distant trade,
they had it in their power to support a most unequal exchange, in
which nothing was taken from them that the buyer could procure at
home; but their rapid increase itself bears witness against the
system which has founded them; they have prospered by a system
diametrically opposite to that followed by the mother country.
The exportation of all raw produce, the importation of all
wrought produce, has been encouraged in colonies, and have
presented to such as believe in the existence, and calculate the
state, of a commercial balance, a result as disadvantageous for
themselves, as it was advantageous for the mother country.
Doubtless, their oppression gave the latter all the profits of a
monopoly; yet, in a very circumscribed market; whilst the free
trade of all Europe, with all its colonies, would have been more
advantageous for both, by infinitely extending the market of the
one, and accelerating the progress of the other. What justice and
policy should have taught, force will obtain, and the colonial
system cannot long continue.
Governments, in the last place, to favour commerce, have
granted it bounties and drawbacks. A bounty is a reward which the
state decrees to the manufacturer, on account of his goods, which
comes to him in the shape of profit. A drawback is a restitution
of all the taxes, which a piece of goods had paid, granted to it
at the moment of its exportation. A drawback is perfectly just
and reasonable. It leaves the national producer, in the foreign
market, on a footing of equality with all his rivals, whilst, if
beforehand be had paid a tax in his own country, he could not
have sustained the competition. Bounties are the strangest
encouragements which a government can give. They may be justified
when granted for the fabrication of an article, the production of
which it is necessary to procure at any price: but when granted
on exported goods, as often happens, government pays merchants,
at the expense of its own subjects, that foreigners may buy
cheaper than them.
Thus, nearly all the favours which governments confer on
trade and manufactures, are contrary even to sound policy or
justice; and, judging of them by the law of profit and loss, we
should infer, that all this attention, bestowed by government on
trade, had done more ill than good. But political economy is, in
great part, a moral science. After having calculated the
interests of men, it ought also to foresee what will act upon
their passions. Ruled, as they are, by self-interest, pointing
out their advantage will not be sufficient to determine their
pursuit of it. Nations have sometimes need of being shaken, as it
were, to be roused from their torpor. The small weight which
would suffice to incline the balance, with a calculating people,
is not sufficient when that balance is rusted by prejudice and
long continued habits. In such a case, a skilful administration
must occasionally submit to allow a real and calculable loss, in
order to destroy an old custom, or change a destructive
prepossession. When rooted prejudices have abandoned to
disrespect every useful and industrious profession, when a nation
thinks there can be no dignity except in noble indolence; when
even men of science themselves, carried away by public opinion,
blush at the useful applications made of their discoveries, and
in such applications see nothing but what they call the cookery
of their sciences; it perhaps becomes necessary to grant favours,
altogether extraordinary, to the industry which it is necessary
to create, to fix incessantly the thoughts of a too lively people
on the career of fortune which lies before them, intimately to
connect the discoveries of science with those of art, and to
excite the ambition of those who have always lived in idleness,
by fortunes so brilliant as, at length, to make them think of
what may be accomplished by their wealth and their activity.
It is true, the mercantile capital of a nation is limited in
a given time, and those who dispose of it, always desiring to put
it out to the greatest advantage, have no need of any new
stimulant to augment it, or turn it into the channels where it
best produces profit. But all the capital of a nation is not
mercantile. Inclination to idleness, which public institutions
have fostered among certain nations, not only binds men, but also
fetters fortunes. The same indolence, which makes those people
lose their time, makes them also lose their money. The annual
revenue of territorial fortunes forms of itself an immense
capital, which may be added to or deducted from the sum devoted
to support industry. In southern counties, the whole revenue of
the nobility was annually dissipated in useless pomp; but to
recall the heads of noble families into activity has likewise
been found sufficient to give them habits of economy. The great
French or Italian proprietor, becoming manufacturer has, at once,
given a useful direction to the revenue of his land, by adding
his own activity to that of a nation becoming more industrious,
and added likewise all the power of his wealth, which formerly
lay unemployed.
The torpor of a nation may sometimes be so great, that the
clearest demonstration of advantages, which it might derive from
a new species of industry, shall never induce it to make the
attempt. Example, alone, can then awake self-interest. French
industry has found, in the single little state of Lucca, more
than ten new branches, to employ itself upon, with great
advantage both for the country and those who engaged in them. The
most absolute liberty was not sufficient to direct attention to
these objects. The zeal and activity of the princess Eliza, who
called into her little sovereignty several head-manufacturers,
who furnished them with money and houses, who brought the produce
of their shops into fashion, has founded a more durable
prosperity in a decaying city, and restored to a beneficent
activity much capital and intellect, which, but for her, would
forever have remained unemployed.
When government means to protect commerce, it often acts with
precipitation, in complete ignorance of its true interests;
almost always with despotic violence, which tramples under foot
the greater part of private arrangements; and almost always with
an absolute forgetfulness of the advantage of consumers, who, as
they form by far the most numerous class, have more right than
any other to confound their well-being with that of the nation.
Yet it must not be inferred, that government never does good to
trade. It is government which can give habits of dissipation or
economy; which can attach honour or discredit to industry and
activity; which can turn the attention of scientific men to apply
their discoveries to the arts: government is the richest of all
consumers; it encourages manufactures by the mere circumstance of
giving them its custom. If to this indirect influence it join the
care of rendering all communications easy; of preparing roads,
canals, bridges; of protecting property, of securing a fair
administration of justice; if it do not overload its subjects
with taxation in levying the taxes, it adopt no disastrous
system, - it will effectually have served commerce, and its
beneficial influence will counterbalance many false measures,
many prohibitory laws, in spite of which, and not by reason of
which, commerce will continue to increase under it.
Chapter 5
Of Money
Wealth incessantly circulates from producers to consumers, by
means of money. All kinds of exchange are accomplished under this
form, whether the means of producing wealth are transmitted from
one proprietor to another, or when land or movable capital
changes its owner, or when labour is sold, or when the object
destined to be consumed reaches the hands that are to use it.
Money facilitates all these exchanges; it occurs among the
different contractors as a thing which all desire, and by means
of which every one may find what he immediately requires; as a
thing, moreover, submitted to invariable calculation, and by
means of which all other values may be appreciated, this alone
being their scale.
Money performs several functions at once: it is the sign of
all other values; it is their pledge and also their measure. As a
sign, money represents every other kind of wealth; by
transmitting it from hand to hand we transmit a right to all
other values. It is not money itself which the day-labourer
requires; but food, clothing, lodging, of which it is the sign.
It is not for money that the manufacturer wishes to exchange his
produce, but for raw materials, that he may again begin to work;
and for objects of consumption, that he may begin to enjoy. It is
not money which the capitalist lends the merchant to profit by;
it is all that the merchant will purchase with this money
immediately afterwards; for so long as the merchant keeps it in
the original shape, he can draw no advantage from it, and his
capital will not begin its course of production till the money is
out of his hands. By an abuse of language, which has caused much
error and confusion, the words money and capital have become
almost synonymous: money indeed represents all other capital, but
it is itself the capital of no man; it is always barren by
nature, and wealth does not begin to increase, till after money
has left the hands of its possessor.
Money is not only the sign of wealth, it is also the pledge
of it. It not only represents wealth, it contains the worth of
it. Like wealth, it has been produced by a labour which it wholly
compensates. In work and advances of all sorts employed in
extracting it from the mine, it has cost a value equal to what it
passes for in the world. It furnishes to trade a commodity which
is expensive; because purchased like every other, it is the sole
kind of wealth which is not increased by circulation, or
dissipated by enjoyment. It issues, still without alteration from
the hands of him who employs it usefully, and of him who
squanders it upon his pleasures. But the high price at which
society acquires money, though at first view it appears an
inconvenience, is precisely what gives it the merit of being an
imperishable pledge for its possessors. As its value was not
given by arbitrary convention, arbitrary convention cannot take
its value away. It may be more or less sought after according as
it occurs more or less abundantly in the market; but its price
can never deviate very far from what would be required to extract
an equal quantity from the mine.
Money, in the last place, is a common measure of values.
Before the invention of money, it must have been very difficult
to compare the value of a bag of corn with that of a yard of
cloth. Dress was equally necessary with food; but the processes
by which men procured them, seemed scarcely susceptible of being
compared. Money has furnished a common and invariable unity to
which every thing can be referred. Nations, who are not
acquainted with the use of metals, have, nevertheless, so felt
the advantages of this common measure that they have formed an
ideal unity, to which they refer every kind of value.
The important part which money performs in political economy,
and the various properties by which it animates exchanges, and
protects and serves to measure them, explain the illusion which
has misled, not only the vulgar, but even the greater part of
statesmen, and exhibited this commodity in their eyes as the
efficient cause of labour, and the creator of all wealth. It is
essential for us, however, to pause here, that we may both
display those errors in a clear point of view, and firmly
demonstrate the principles which follow. In the epoch of
civilization, at which we are arrived, no labour can be
accomplished without a capital to set it in motion; but this
capital, though almost constantly represented by money, is yet
quite a different thing. An increase of the national capital is
the most powerful encouragement to labour; but an increase in the
circulating medium has not of necessity the same effect. Capitals
co-operate powerfully in the annual reproduction of wealth,
giving rise to an annual revenue; but money continues barren, and
gives rise to no revenue. Indeed, the competition between those
capitals, which are offered to accomplish the annual labour of
the nation, forms the basis for the interest of money; but the
greater or less abundance of the circulating medium, has no
influence in the fixing of this interest.
Painful experience has shown all the inhabitants of Europe
what a dearth was, and a period of general penury among a
civilized people. At these mournful epochs, every one has heard
it a hundred times observed, that it was not corn or food which
was wanting, but money. Indeed, vast magazines of corn have often
remained full till the next harvest; those provisions, if
proportionably shared among the people, would have almost always
been sufficient for their support; but the poor, having no money
to offer, were not able to buy them; they could not, in exchange
for their labour, obtain money, or at least enough of it, to
subsist. Money was wanting, natural wealth superabundant. What
phenomenon could appear more proper to confirm the universal
prejudice which looks for wealth in money, not in consumable
capital?
But the money, which is wanting in a time of scarcity, is the
wage offered to the workman to make him labour. the wage, by
means of which, he would have purchased a subsistence. The
workmen never labour, except when some of those who have
accumulated capitals, or in other words, the fruit of preceding
labours, can profit from those capitals, by furnishing, on one
hand, the raw material, on the other, a subsistence for the
artisan. Labour cannot be carried on so as to produce any
material fruit, any fruit capable of becoming wealth, without raw
materials on which to operate; the workman cannot labour without
food to support him; and, therefore, every kind of labour is
impossible without a capital previously existing in objects of
consumption, to furnish his materials and his wages; and, if the
workman himself lay out these advances, it is because he combines
for this little object, the two characters of capitalist and
artisan.
As the workman requires a capitalist, so the capitalist
requires workmen; because his capital will be unproductive if it
continue idle; and the revenue which he expects and has to live
upon springs from the labour which he causes to be executed.
Hence, whenever he is occupied in a productive enterprise, he
employs all his capital in causing labour, and leaves no part of
it in idleness. If he is a cloth-maker, and has devoted ten
thousand pounds to his manufacture, he does not stop till his ten
thousand pounds are done, and he no longer has new sums to employ
in the operation. If it be then asked why he stops, he will
answer, like the workman, that money is wanting, that money does
not circulate.
It is not, however, money which is then wanting any more than
in the former case; it is consumption, or the consumer's revenue.
On commencing his manufacture, the capitalist studied to adjust
it to the demand; and he reckoned that as soon as his cloths
should be ready, they would be purchased by consumers, whose
money, the sign of their revenue, would replace his capital, and
become the sign of subsistence to new workmen, to whom he would
pay new wages. It is not money which the consumer is in want of,
but revenue. Some have had inferior harvests this year; some have
gained a smaller interest on their capitals, a smaller share on
the annual re-production of the fruits of industry; others, who
have no income but what arises from their labour, have not found
employment; or else the whole three classes are not poorer than
they were, but the manufacturer had imagined them to be richer,
and regulated his production according to an income which does
not exist.
Income, of which we have seen all the different sources in
the second chapter, is a material and consumable thing; it
springs from labour; it is destined for enjoyment; it is exactly
of the same nature with the advances in wages and raw material
laid out by the manufacturer; and money is but the sign and the
measure of it. The capital it should replace is also composed of
material objects, destined for consumption, and incessantly
renewed. Money serves but to represent it, and always forms the
smallest part of each merchant's funds. We have supposed the
cloth-maker to possess 100,000 l.; but, it half this sum is
employed in fixed capitals, it will be sufficient, if his sale
amount weekly to 1200 l. to give him, in the shape of interest
and profit, 20 per cent. on his circulating capital, and to allow
1000 l weekly, in money, to maintain an annual production of
60,000 l.; so that he never possesses in cash more than the
fiftieth part of his circulating capital.
An increase of the national capitals is the most powerful
encouragement of labour; either because this augmentation
presupposes an augmentation of income, and, consequently, of
means of consumption; or because these capitals, not being
profitable to their proprietor, except as they are employed, each
capitalist incessantly endeavours to create new production by
their means. In distributing them to his workmen, he gives to
those workmen revenue which enables them to purchase and consume
the preceding year's production; and he sees those capitals
return increased by the revenue, which he is to expect from them
in the following year's production. But though he distributes and
afterwards recovers them, by means of the circulating medium,
which serves for all exchanges, it is not the circulating medium
which forms the essential requisite in his operation. The same
cloth-maker, labouring each year on an equal quantity, sends 2400
pieces of cloth to the market, which have been valued at 60,000
l. or 25 l. a piece. He exchanges 400 pieces for such objects of
consumption as are needed to supply the wants, the enjoyments,
the luxuries of himself and family. He exchanges 2000 pieces for
the raw materials, and the labour which, within the year, are to
re-produce an equal quantity; and thus next year, and every
following year, he will have, as before, 2400 pieces to exchange
on the same conditions. His capital, equally with his revenue, is
actually in cloths, not in money; and the perpetual result of his
commerce is to exchange cloth against cloth.
If the consumption of cloth is increased, if by this means
his trade, in place of comprehending 2400 pieces annually,
comprehends 3000, more labour will, no doubt, be ordered by him,
and executed by his workmen; but if the money alone is increased,
and not the consumption or the income which determines it, labour
and production cannot increase. Let us take separately each one
of his customers, as he calls them. There is not one of them who
does nor levy a greater or a smaller portion of his income in
kind, but all may arrange matters so as to receive the whole of
it in money. They are not, however, more rich on this account;
they will not be at more expense; they will not buy more cloth
from him, and this trade will experience no kind of augmentation.
What happens to individuals may equally happen to nations. The
revenue of a country or the sum total of profits arising from the
different kinds of labour, amounted, we shall say, last year, and
this year, to fifty millions; but last year the country levied
all its profit in goods, in merchandise destined for its
consumption; this year, from some mercantile circumstance, some
arrangement of exchanges, it has levied the fourth, the third
part, in money imported through the frontiers. It is neither
richer nor poorer, for this alteration; its consumption will, as
formerly, be fifty millions; and with regard to the money
imported, apparently its industry required this money, otherwise
it will be again exported. To increase the circulating medium of
a country, without increasing its capital, without increasing its
revenue, without increasing its consumption is to do nothing for
its prosperity, nothing for the encouragement of labour.
Since no labour can be accomplished without a capital to set
it in motion; since no re-production of wealth can take place
without raw materials for the work, and subsistence for the
workmen, it follows that the furnisher of those wages and
materials has taken the most intimate share in the re-production;
he is, in a great degree, the author of its profits, and has the
most evident right to participate in them. But he who lends a
capital lends nothing else but those wages and raw materials
represented by money. He lends a thing eminently productive, or
rather the only one which is productive; for since all wealth
proceeds from labour, and all labour is put in motion by its
wage, he lends labour itself, or the first cause of production in
all kinds of wealth. Hence, whenever an odious sense has been
attached to the word usury, meaning by it any kind of interest
paid for the use of a sum of money, under pretext that as money
produced no fruit, there could be no lawful share of profit where
there was no profit; in this case, an absurd distinction has been
formed. There was just as much reason to prohibit the renting of
land, or the wages of labour, because without a capital to put
land and labour in exercise, both would remain unfruitful.
Theologians, however, were right in saying that gold and
silver were barren by nature: they are barren so long as kept in
their own shape; they cease to be barren, the instant they become
the sign of another kind of wealth, which is emphatically
productive. Theologians, if they determined to abide by the
single principle on which their prohibition was founded, should
have been contented with declaring usury criminal, every time the
lender obliged the borrower to keep the deposit in its primary
form, locked up in a strong box, from the moment of borrowing to
that of payment. For it is quite certain that money, whilst
locked up, produces no fruit; and neither borrower, nor lender
can get good of it except by parting with it.
But, if money is of itself barren; it produces no fruit but
in so far as it is the sign of other values, then it is evident
that no good can be done by multiplying the sign and not the
thing. It is true, if you multiply the sign in a single country,
you give this country the means of commanding the thing, provided
that thing be found in any, country. but when you multiply the
sign in all countries at once, you do nothing for any. At
present, there exists such a proportion between the sign and the
thing, that a pound sterling is worth a bag of corn; but if, by
the stroke of a magic rod, you should instantly double all the
money in the world, since every thing to be obtained in exchange
would continue the same, two pounds in place of one would be
required to represent a bag of corn. The quantity of corn
consumed by a workman, in food, would not be altered,
consequently his wage must be doubled. With twice as many
guineas, exactly the same work would be done, and nothing would
be changed but names and numbers.
Capitalists require their capital to be employed, that it may
gain a revenue; and hence they offer it for a certain price, to
such as wish to cause labour; workmen, on the other hand, and
those who employ workmen, have need of capital for their labour;
and, after reckoning up the profit expected from it, they offer a
certain share of their advantage to capitalists. The necessities
of money-lenders and of money-borrowers, come thus to a state of
equilibrium in all markets; those classes of men agree upon a
medium rate. The regulator of their bargain is always the
quantity of labour required by consumers, compared with the
quantity of capital, representing raw materials and wages, to be
disposed of in executing this labour. If the want is great, and
the means of labour small, the interest of money will be
considerable; if, on the contrary, there is much capital in
circulation, and little employment for it, interest will be very
low. It must always be regulated by what is called the quantity
of money offered in the market, because money is the sign of
capital, though not capital itself. Far from being augmented by
the magical increase of money above alluded to, capital would not
even be increased by the arrival of money, in great abundance, at
a particular place of trade, without losing any thing of its
value in comparison with the things it purchases; and no change
in the rate of interest would result from this circumstance.
Nearly all the circulating capital of each manufacturer and
trader is successively presented to him under the shape of money,
in its return from the buyer to the seller; but the part of his
funds, which a merchant actually has in money, forms, in ordinary
cases, but a small portion of the capital employed in his
commerce; an infinitely greater portion being kept in its
original state in his own warehouses, or in those of his debtors.
On the other hand, it is almost always in the power of each
merchant instantaneously to augment the quantity of money at his
disposal, by selling his goods at a less profit, or by
discounting the debts which are owed him. In this way, he has
money when he pleases, without being richer; the money, far from
adding to his capital, is purchased with it. If such operations
are performed at one time by several merchants in the same town,
that town purchases money from its neighbours; if by a great
number of French, English, or German merchants, we say that
France, England, or Germany purchases money. There will, in
reality, be found much more in the markets to make payments with;
guineas will be much more abundant; but there will be neither
more nor fewer deposits offered to lend, and the rate of interest
will not be any way affected by the change. Such as are
acquainted with the movements of trading places, know well that
guineas may abound in them while capitals are scarce, or guineas
be scarce while capitals abound.
It is a gross error, then, to believe, that, in all cases, a
considerable importation of the circulating medium will make the
rate of interest fall, or an exportation make it rise. Money is a
kind of wealth; and like any other kind of wealth, it forms part
of the circulating capital. If the money imported is a gift, or a
tribute; if it costs nothing to the nation, it will certainly
augment its circulating capital, and must certainly contribute to
lower the rate of interest on the spot; but the same sums paid to
the nation in goods would equally contribute to that end. If, on
the other hand, this money has been purchased with any other
portion of the capital, in that case the sum total of the latter
will remain the same, and the rate of interest will not be
affected.
Upon these principles, it is easy to see how mines of silver
and gold do not enrich a nation more than any other kind of
industry. The precious metals drawn from the mine are goods
purchased, like all other goods, at the price of labour and
capital. The opening of the mine, the construction of its
galleries, the establishment of refining furnaces, require large
advances, independently of the labour by which the ore is drawn
from the bowels of the earth. This labour, and its fruits, may be
exactly paid by the metal produced, and the state will gain by
the operation, as by any other manufacture. But, in general, the
profits of mines are irregular. As the head prize in a lottery
seduces gamesters, an unlooked for advantage encourages miners to
continue their exertions, although the usual returns be inferior
to those obtained by any other kind of industry; and nearly all
of them are ruined, just like gamesters, because they were at
first successful.
From these principles, we may also conclude, that the blame
so frequently imputed to Frederic II and the Canton of Berne for
having hoarded up and withdrawn from the country a large portion
of the natural circulating medium, is without foundation. By
saving a part of their expenses, they, of course, in some degree,
diminished consumption and re-production; by preserving some
millions in their coffers, they in some degree diminished the
circulating capital: but the money locked up by them was soon
replaced by other moneys which the country purchased; and,
besides, the whole circulating medium of a nation is so small,
compared with its whole circulating capital, that such a void can
never be considered as a national misfortune, or counterbalance
the immense advantage of possessing a fund ready, without new
sacrifices, at the moment of want.
From confounding money with capital, has arisen the general
mistake of attempting to increase the national capital by a
fictitious capital, which, not having been created by an
expensive labour, is not, like gold or silver, a pledge of the
values it represents; and which, after having delighted nations
with the illusions of wealth, has so frequently left them in
ruin.
It will be more easy to follow the operation, by which so
many states in our time have endeavoured to replace their money
by paper, if we previously direct our attention to the manner in
which one of the most ancient trading cities of France made a few
crowns perform the functions of a considerable circulating
medium. At Lyons, it was agreed upon in trade, that all payments
should take place only at four fixed periods, quarterly. During
the three days which the payments took up, all the accounts of
the city were settled at once. Each, at the same period, had much
to receive and much to pay. But, on the days immediately
preceding the payments, all the merchants used to meet on the
exchange, to make what they called viremens; in other words, to
assign, one to another, such sums as would settle their accounts.
A owed B, who owed C, who owed D, who owed E, himself indebted to
A; and the five accounts were settled without any payment. If E
was not indebted to A, it was agreed that A should pay E, and the
other four were acquitted by a single payment. Every merchant
bought but to sell again; received, therefore, but to pay; and if
those assignments were extended to their utmost limits, one
single sum of ten thousand pounds would probably settle all the
transactions of a city, though these amounted to several
millions.
But all mutual debts are not equal, and bankruptcies occasion
difficulties, and sometimes errors in the assignments. The
invention of banks has supplied this deficiency. The Bank of
Amsterdam is a kind of open bar, where assignments may constantly
be made. Every trader pays or receives, by a line which is
written down in the bank's books, on the debtor or creditor side
of his account, without any money being disbursed. Among
merchants, who have all an open credit with the bank, the
operation of the book-keeper supplies with the utmost ease that
of cashier; and no difference of amount, or day of payment,
prevents sums from being reciprocally balanced.
A bank like that of Amsterdam, however, is of use only to
such as have a current account in it. Many traders may have no
account; and few or none who are not traders ever have any,
though called, as well as others, to pay and to receive. To
extend the advantage of assignments also to the business of such
persons, those note-banks were invented which have since become
so common in all parts of Europe. Their notes are assignments on
the bank, payable to the bearer on demand. Each, by combining
several notes, may make his odd payments himself; and hence it is
generally most convenient for him to transmit them to others, as
he received them, without having drawn any money; and even though
each may require payment at his pleasure, no one thinks of it,
just because each feeling that he may do it any time, feels
always that it will be soon enough afterwards.
Up to that period, banks had done nothing but simplify
payments, and save the employment of money, and render
circulation easy with a smaller sum than would otherwise have
been required. But some one must profit by this saving. In
arranging the assignments at Lyons, each profited according to
his share in trade; each needed to have money in his coffers only
four times yearly, for three days. He, of course, gained interest
for the remaining 353 days; and as those assignments simplified
all his operations, a smaller sum performed for him the office of
a greater. When banks were established, it was they that profited
by this saving of money. They received interest, not for the
money really given by them, but for the money, which every bearer
of notes had it in his power to demand from them, at a moment's
notice. This interest of notes, reckoned equal to gold, was a
pure advantage for bankers; since the money promised, far from
being drawn, had not even remained at the bank, where it would
have been barren. Bankers, reckoning on the confidence of the
public, had caused it to labour, and recalled it for their
payments only as they needed it.
It was by discount on such of the proceeds of trade as were
payable at long dates, that banks pushed their notes into
circulation. They required an interest for exchanging their paper
against that of trade, because theirs was exigible at sight,
though it was not really paid before the other. The discount
required by the bank served to introduce the interest of money,
and to regulate it in the place. Bankers, in virtue of their
credit alone, seemed to have capitals of almost immense extent,
to offer in the service of merchants. Credit soon appeared to
have a creative power, and speculators, persuaded that by
emitting a bank one, they added as much to the public wealth as
by importing an equal sum of money, delivered their minds to
dreams dangerous for themselves, and for the states that gave ear
to them. They proposed the establishment of banks to multiply the
funds of trade, to provide for the enterprises of agriculture, to
set labour every where in motion, to increase the general
capital; and redouble the activity of industry.
Governments, on their side, imagined that in banks they had
found an open mine, from which they might draw at discretion. At
each new season of need, they stuck new bank-notes. But they soon
perceived, with astonishment, that notes were no longer received
with the same confidence, and were speedily carried back to the
bank for payment; and next, as their custom generally is, they
substituted their authority for the nature of things. They
refused payment on demand, but they ordered each citizen to
receive as ready coin, those notes which had thus become paper
money; and they authorised every debtor to pay his accounts with
it.
The circulation of paper money became, in a short time,
nothing less than a general bankruptcy. Notwithstanding all the
orders of government, paper fell every day in its proportion to
silver or to goods. The bearers of it, feeling that they had no
pledge for the values, the sign of which they were always
presenting, dreaded lest the paper should undergo a new
deterioration in their hands, and made haste to get rid of it.
Each lost and caused loss, each having no longer any common
measure of value, became unable to distinguish the gain from the
loss of his bargain, and always selling with advantage, he ended
in ruin. During this time, coin disappeared, goods themselves
were exported from the country, without giving any return; and
the expedient, which promised to create immense wealth, produced
nothing but ruin and confusion.
A fatal error had led to all these misfortunes. It was
imagined that credit had the power of creating wealth; whilst, in
fact, credit never creates any thing, but merely borrows with one
hand to lend with the other, that wealth, which, to be of use,
must have previously existed in the state. Paper money can be
substituted only for the metallic money already in existence; it
is the value of this which it borrows. The banker, who finds
credit, acquires the power to dispose of a part of the currency
equal to the paper he emits. If he in reality withdraw part of
the currency from circulation, his paper will remain there; if he
does not withdraw it, others will withdraw it for him, the
instant it becomes superfluous. But, if this currency was not in
circulation at the moment when his bank-notes were emitted, he
could not borrow it. In that case, by giving forced circulation
to his paper, he depreciates not only this paper, but all that
was already in the hands of the public.
The money of a country has a determinate relation to the
wealth of that country, and to the activity with which its wealth
circulates. The same guineas serve, in the course of a year, for
a great number of different bargains; yet still there is a
necessary equation between the mass of values sold, and the sum
of guineas which serves to pay them, multiplied by the rapidity
of the circulation. If too many guineas exist in the country for
the wants of the circulation, this is not a reason why the person
holding them in his coffers should keep them longer than he has
occasion so to do. All useless stagnation would be so much
interest lost for him; and, therefore, he continues still to give
them circulation, and some one is always at hand, who, not
finding any profitable use to make of them in the country, takes
them out of it. If exportation is forbidden, a greater mass of
idle guineas will be kept within the country, till the loss of
those unable to employ them be great enough to pay the risk of
smuggling. If precautions are so well taken that exportation is
entirely impossible, the whole money circulated in the country
will fall in value till it be reduced to the equation which it
cannot pass, that is, to the numerical value of all the sales and
payments made within the year, divided by the rapidity of
circulation.
In like manner, if the money of a country is not sufficient
for its circulation, the country will purchase money in exchange
for some one of the values it possesses, just as it would have
purchased any other kind of goods. It is not the balance of trade
which can make money enter or leave a country. This balance is
completely illusory, for it is not true that nations settle their
accounts with each other. On the contrary, indeed, it often
happens that one is constantly a borrower, the other constantly a
lender. And, the credit sales of the most commercial being
renewed from year to year - before the first debt is
extinguished, a second is already contracted, which is followed
by a third; and though each is paid in its turn, the purchaser
may nevertheless, perpetually remain debtor to his seller. Thus,
sales on credit form a capital which may either increase, or be
reimbursed in the inverse sense of other commercial speculations.
Abstracting all that concerns these credits, which modify
more than three-fourths of its commercial speculations, the
purchases of a nation would be exactly balanced by its sales;
because it is as impossible for the one always to purchase, and
find the source of a perpetual draining of money, unless it work
at mines, as for the other to sell always, and find an employment
for a perpetual importation of coined metal. Money is imported,
and exported from one nation to another, not because it pays
their accounts, but because the one having need of it, sells
goods cheaper, till it has acquired enough; and, because the
other, having more than enough for its circulation, buys dearer,
or, gives a greater quantity of guineas for the same quantity of
goods, till the equilibrium is reestablished.
But as the emission of any sum in bank notes, supplies the
place of an equal sum of money, the latter is immediately
withdrawn from circulation, and sold in foreign countries. So
long as there remains any coin to be exported, credit may repeat
its operation and create new bank notes; when there is no more
coin to export, the paper money, will, of itself, diminishing in
value, seek the proper equation; and to whatever nominal sum its
fabrication may be carried, it will never sell, in the total
amount, for any thing more than the pre-existing total amount of
money which it replaces.
Chapter 6
Of Taxation
The primary object of political economy is the development of
national wealth; but the object of all governments, since they
began to bestow any attention on this subject, has been to
participate in this wealth, and to acquire the disposal of a
greater share of the nation's annual revenue. The ever increasing
necessities of governments, and the excessive expense of wars,
have forced princes to load their people with the weightiest
possible yoke. Taxation, of itself always an object of repugnance
to the subject, has become a nearly intolerable burden; the
question is no longer how to make it easy; it is not to do good,
but to the least possible evil, that all the efforts of
governments in this respect are limited.
Quesnay's sect of economists, who discovered in the net
revenue of land the solitary source of wealth, might also believe
in the advantage of a solitary species of taxation. They rightly
observe, that government, in justice, ought to apply to him who
is destined to pay the tax in the long run; because, if this tax
is paid by one citizen, reimbursed by a second, who again is
reimbursed by a third, not only will there be three persons
instead of one incommoded by this payment, but the third will be
so much the more incommoded, as it will be necessary for him to
indemnify the preceding two for their advances of money. Upon the
same principle, the economists called the tax which weighs on the
revenue of land a direct tax; to all others they gave the name of
indirect, because those taxes arrive indirectly at the person who
pays them at last. Their system has fallen, their definitions are
no longer admitted, but their denominations have remained in
general use.
We have recognised but a single source of wealth, which is
labour; yet we have not recognised but a single class of
citizens, to whom the revenues produced by labour belong. These
are distributed among all the classes of the nation; they assume
all manner of forms, and, therefore, it is just that taxation
should follow them into all their ramifications. Taxation ought
to be considered by the citizens of a state as a recompense for
the protection, which government grants to their : persons and
properties. It is just that all support this, in proportion to
the advantages secured them by society, and to the expenses it
incurs for them. The greater part of the charge arising from
social establishments, is destined to defend the rich against the
poor; because, if left to their respective strength, the former
would very speedily be stripped. It is hence just that the rich
man contribute not only in proportion to his fortune, but even
beyond it, to support a system which is so advantageous to him;
in the same way as it is equitable to take from his superfluity
rather than from the other's necessaries. Most public labours,
most charges for defence and for the administration of justice,
have territorial rather than movable property in view; it is
hence farther just, that the landed proprietor be taxed in
proportion higher than others.
After the sources of income have become various, it cannot be
supposed that a single tax will reach them all, unless it assume
as a basis this income itself, the valuation of which, in any
form, would give room to the most arbitrary and vexatious
inquisitions. The tax, though single, would in that case lose all
the advantages of simplicity. It was better then, for
contributors, as well as government, to multiply taxes, that each
by itself might be lighter, and the whole might better reach
every class of persons. Governments have therefore multiplied
partial taxes. They have taken wherever they have found any thing
to take; and though flattering themselves with having thus
reached all their subjects, it would be impossible for them to
appreciate how much is asked of each class, and consequently to
maintain the proportional equality which justice would have
required. On the other hand, contributors like better to submit
to this heavy inconvenience, than to the obligations of
exhibiting an account of their incomes, which, often they do not
know themselves, and to a division on arbitrary grounds, which
most frequently would be intolerable.
In establishing those different taxes, four rules appear of
essential importance for rendering each tax as little burdensome
as possible. Each citizen must contribute, if he can do so,
according to the proportion of his fortune; the collection must
not be expensive, that so the tax may cost as little to the
people as possible beyond what it brings into the treasury; the
term of payment must be suitable to the contributor, who might
frequently be. ruined by an unreasonable demand of what he could
pay, without constraint, if his convenience were consulted; and,
finally, the citizen's liberty must be respected, that so he may
not be exposed otherwise, than with extreme cautions to the
inspection of revenue-officers, to the dependent, and all the
vexatious measures too often connected with the levying of taxes.
Among the taxes that reach with any equality all classes of
contributors, some are proportioned to the income of each, others
to the expense of each. These two ways of estimating fortunes
seem capable of being adopted indifferently. and, if the expense
is not proportionate to the wealth, there is no inconvenience, if
the impost, which is regulated by this expense, be, as it were, a
bonus on economy, or a fine on prodigality. Tithes, the land-tax,
the income-tax, are destined to reach what the contributor
receives. Taxes on consumable articles are the chief species of
contribution on expenditure. There remains, however, a great
number of other taxes, which cannot be arranged under these two
heads, and which, accordingly, are not in proportion to the
contributor's fortune.
The revenue most easily attained by taxation is that which
proceeds from land; because this species of wealth cannot be
concealed from sight; because, without the proprietor's
declaration, the value of it may be known, and because, in
gathering the produce at the moment when nature grants it, we are
sure exactly to meet the proprietor's convenience for paying it.
But economists are divided in opinion as to the two modes of
collecting this tax, the one in kind from the unaltered product,
the other in money from the proprietor's net revenue.
Tithes, a tax, according to the first of those methods, is
leveled at the moment of abundance, before the producer has in
any shape taken possession of his property. The rule, according
to which tithes are established, is so universal, that few
discussions or vexations arise from it, and this gives it a great
appearance of equality. The collection of a tax in kind requires
a great number of clerks and warehouses, and hence it is
expensive; but this inconvenience might be repaid, if government,
after the collection, kept in its granaries the corn delivered to
it, till a period more favourable for sale. As cultivators
generally cannot wait for this period, the loss suffered by a
premature sale would, perhaps, of itself, cover all the charges
of collection. Combining such advantages, a national impost in
the shape of tithes has seduced many political speculators.
Tithes have also been defended with obstinacy by the powerful
body to whom they are in general abandoned. Those advantages do
not extend to what are called small tithes, an impost vexatious
in all its details; the difficult collection of which is an ever
fresh root of hatred between the curate and his parishioners,
though the impost was intended to unite them all as a single
family.
But the advantages of tithes, in any shape, are more than
compensated by their real inequality, and the obstacles they
oppose to industry. The expense of cultivation is far from being
the same in good and in bad soils; in good and bad years; yet the
reimbursement of that expense is made by part of the crop, and
this part at least should not be subjected to any tax, for fear
of destroying the reproduction of the following year. It is not
the revenue alone that is tithed; but at the same time all the
seed, the manure, the days of labour, which have produced the
crop: for all this, the latter ought to restore. In good years,
and good soils, two sheaves in ten may represent all these
advances: in bad years or soils, eight in ten scarcely cover
them; it is not very rare even that the whole crop is
insufficient to pay the expenses. Tithes, however, are equally
levied in all those cases; from the first they take an eighth
part of the land revenue; from the second a half; from the third,
which is nothing, they take a portion of the capital destined to
produce the following crop; and their inequality is the more
cruel, because it is always the poor whom they oppress, taking
most from the very persons whose necessity requires most
moderation.
Again, the more productive a mode of cultivation is, the more
advances does it need to have committed to the ground. Tithes,
which are but the seventh or eighth part of the revenue in a
pasturage, become the fifth in a field of corn, the third in a
vineyard, the half in a hop-yard or in a field of hemp, and the
whole in a garden. Thus whilst the national interest incessantly
requires the raw produce to be incessantly increased by
committing larger advances to the ground-tithes instruct the
cultivator incessantly to diminish his advances, and follow that
species of culture which gives back least to the nation, but
which also least exposes him who undertakes it to be punished for
his industry.
The land tax has not the same inconveniences; it affects only
the net revenue; it is enabled to reach it with equality enough,
and above all, with a regularity which screens the contributor
from every arbitrary proceeding, and which, therefore, is to him
more precious than justice itself. On being established, it
strips the proprietor of a considerable portion of his fortune,
for he loses all at once a part of the very capital whose rent
alone must pay the tax; but this loss, after having stuck him, is
never repeated. From that time he no longer looks upon this
capital as belonging to him; a new purchaser, on buying the land,
does not pay him any price for this portion; the state has become
thenceforth its true proprietor. On the other hand, this
territorial impost often requires money from such as have none;
it forces them to sell their commodities to obtain the quantity
wanted, perhaps at the most unfavourable moment; and it thus
contributes to cause a glut in the market at the moment of
harvest, and a scarcity at the year's end. Besides, if too heavy,
it discourages the proprietor from laying out new advances upon
land which he looks upon as scarcely any longer his.
If the capitalist could as easily be come at as the
proprietor of land, it would be quite as just to tax him directly
for the support of a government which guards his property. The
interest of money would be a taxable material, fully as suitable
as the rent of land. But the capitalist' s wealth cannot be known
without a vexatious inquest, which, in trading counties, would be
destructive to credit. Capitals, moreover, are not attached to
the soil, and if loaded with imposts, the capitalist would be
induced to transmit them into other counties, often without
emigrating himself. He would thus deprive his country of all the
labour which those capitals would support; he would diminish the
national revenues in a proportion immensely superior to the
advantages which the treasury could expect from the new tax.
Other species of revenue escape still more easily from direct
contribution. A considerable revenue in the state, for example,
is the profit of trade and that of manufacture; but, on being
directly taxed, it is almost sure to be annihilated. Another very
considerable revenue is that of workmen, who gain but a mere
wage; the great number of those who enjoy it, makes up for the
slenderness of the portion belonging to each. Such also are the
revenues of all those classes whose labours leave no products
which are substantial and capable of accumulation. Most men who
live by those different means, do not even know the extent of
their revenue; because, receiving it day by day, and expending it
in the same manner, they think they have nothing when their
labour is all that remains. They form the poorest class of
society, but also the most numerous; and, if we add up the annual
consumption of all the day-labourers, it is greatly superior in
value to that of all the rich.
But before we think of taxing this revenue, we must remember,
that nothing can be more absurd, as well as cruel, than to take
away a part of the necessary emolument of productive workmen;
for, either it must actually be paid by them, in which case they
would suffer, languish, and at last die of penury, and with them
would also be destroyed the national revenue, which should spring
from their labour; or else they would succeed in obtaining
reimbursement for their contribution, either on the class which
employs them, or on that of consumers. F or this purpose, they
would raise either all their wages, or the price of all their
produce. Thus they would raise manufactures, or, at least, shut
foreign markets; and, by a circuit a little longer, they would
equally arrest production, and destroy the national revenue. No
operation, however, could be more difficult than to separate, in
a poor man's revenue, the necessary from the superfluous, which
alone can be taxed. Besides, such a tax would be to fix
contribution on labour and industry; or, in some degree, to
inflict a penalty on those qualities which it is the most
essential to encourage; it would be to arrest, at their source,
the wealth and prosperity of states. Such are the motives which
have generally prevented a universal tax on income; or, at least,
have prevented it from reaching the industrious classes
completely enough to become productive.
But those different kinds of income, which cannot be
appreciated for taxation, at their origin, are always employed in
consumption; and this is the moment when taxation can reach them
with far less inconvenience. By taxing every kind of goods, in
the purchasing of which wealth may be employed, we are sure to
make that wealth contribute, and we need not know to whom it
belongs. For such a contribution there is not required any
declaration of fortune, any inquisition, any distinction of poor
and rich; it does not attach taxation to labour; it does not
punish what ought, above all other things, to be encouraged.
Besides, each contributor pays his taxes on consumption, as it
were in a voluntary manner, at the time when he has money, and
finds himself enabled to purchase the thing taxed; he reimburses
the merchant, who has already advanced the impost, and he
scarcely perceives that himself has paid any.
Taxes on consumption are, however, very far from being able
to reach the revenue in a correct manner, by means of the
expenditure. It is required, for example, that every kind of
fortune, every kind of industry, protected by the state, should
pay the treasury ten per cent. of the revenue which they give. At
first view it appears that this object would be obtained by
taxing every consumption, every expense, of what nature soever,
at ten per cent. of its value. But if we attempt to come at every
kind of consumption, we must subject to the same tax the
commodities produced in the interior of families by domestic
industry, those produced by the national manufactures, and those
introduced by foreign commerce. By making exceptions to this
rule, not only would the principle of equality he destroyed, in a
very unjust manner, but also each would be induced to serve
himself, greatly to the prejudice of manufactures, trade, and the
division of labour, which much increases its productive power. On
the other hand, by following it rigorously out, each family would
be subjected to an inspection of its domestic economy, absolutely
insupportable.
The universality of such a tax would have a still more fatal
inconvenience, if it were extended to commodities of prime
necessity. By exempting such commodities, a very considerable
portion of the national expenditure is left out; but, in taxing
them, the risk is run of confounding the necessary with the
superfluous, in the poor man's consumption; and, should the
former be encroached on, of arresting the reproduction of
revenue, either by the penury and death of the workman, or by the
rising of his wages.
In the last place, no idea could be entertained of taxing
goods destined for exportation; because, whenever the price of
them was raised, foreign consumers would provide themselves
elsewhere; it would be necessary, in that case, to restore, by
drawbacks, all the customs levied on them. But how could endless
frauds upon this principle be avoided? The vexatious laws
intended to subject foreign commerce to a constant
superintendence, to prevent such frauds, would alone be
equivalent to a heavy contribution.
It is a great inconvenience of taxes on consumption, that it
never can be known at their establishment who is to pay them in
the long run. The legislature always proposes to make them be
reimbursed by the consumer; but sometimes they do not reach his
distance; at other times, they do not stop at him, and the
consumer is anew reimbursed for them by those for whom he
labours. To make the consumer pay the whole tax, the nation must
be in a state of increasing prosperity; for otherwise, as the
consumer is not richer than before the tax, he cannot devote more
money than formerly to his enjoyments, and must, therefore, in
some shape, diminish his consumption. The producer, on his side,
no longer selling the whole of his goods, must diminish his
production, or consent to pay a portion of the tax. If a public
calamity happens, a scarcity or even a state of embarrassment in
trade, consumption still further diminishes; and the producer,
compelled to dispose of his goods, pays the whole tax; till, no
longer finding any profit in his labour, he abandons it entirely.
On the other hand, when taxes and consumption have raised the
price of every thing, industrious men, who form a numerous class
among consumers, no longer find in their industry sufficient
resources to support them. His wages no longer furnish the
day-labourer with those limited enjoyments which are to be
reckoned among the necessaries of life, since life, or the power
of labouring, could not long be maintained in an individual
deprived of every pleasure. He struggles, therefore, with all his
strength, to get his wages increased; the manufacturer and
merchant, in like manner, to get their profits increased. As the
total sale diminishes, it is necessary for their subsistence that
they obtain more for each separate article. Their joint efforts
soon succeed in raising the price of all goods coming from their
hands, but especially goods of prime necessity, because the
sellers of these give the law to buyers, who cannot do without
such goods. A rise in the price of those commodities reacts anew
on wages and profits; the disorganisation becomes complete;
national productions cost much higher than those of countries not
oppressed by a similar system; they cannot support a competition
in foreign markets; exportation ceases, demand is not renewed,
and the nation sinks under a frightful distress.
If a universal impost on consumption presents insuperable
difficulties, partial imposts are equally liable to
inconveniences. When one kind of goods has been taxed by
universal custom, as salt is, a considerable sum of money has
indeed been raised; but a tax on consumption has been changed
into a sort of capitation, which weighs equally upon the poor and
upon the rich, without any regard to the contributor's fortune,
or his means of making payment. The salt tax, when so
considerable that the day-labourer feels the weight of it, is,
perhaps, the most unequal of all imposts. The poorest house
consumes as much as the richest; but the poor must take, from
what is essentially necessary to their subsistence, a sum which
the rich scarcely notice in their superfluity.
It were vain to seek, among articles of consumption, for one
which is proportioned to expenditure or to wealth; some are
sought after by the rich alone, hut they do not use them in
proportion to their riches. A duty of consumption on tea, sugar,
spices, does not reach a class so numerous as a duty on salt; but
among those paying it, this duty is proportioned only to what a
single individual can employ in his use. It spares the poor, but
it weighs not upon the rich; it is, consequently, very
unproductive, whilst duties extending to the smallest consumption
are the only ones which bring in much to government.
By degrees, duties on consumption have been extended to every
kind of production. It has been imagined that if the rich man was
made to pay a first capitation on salt, a second on light, a
third on drink, a fourth on food, a fifth on clothes, there would
be established a kind of proportion between his contributions and
his fortune; because he would pay a much greater number of taxes
than the poor man, although each tax, being limited by the
individual's physical wants, was disproportioned to his wealth.
The impossibility of establishing a uniform and universal law,
was clearly felt; and the attempt was made of approximating to
it, by a multitude of partial laws.
Hence has arisen a fourfold division of duties on
consumption, which are adopted in almost all countries; namely,
the gabelle, custom, excise, and tolls. The gabelle comprises
those commodities of which the government claims a monopoly, salt
and tobacco, for example; it sells them alone, at a high price,
by its agents or favourites, and prosecutes by rigorous penalties
all such as attempt to take a share in their manufacture or
trade. Customs are destined to levy a proportionate duty on goods
imported from foreign counties; and the excise, or aids on goods
produced in the country itself. The former is only established in
the confines of the territory; and although the advancement in
price of those taxed commodities is equally felt over the whole
state, the vexations which accompany the levying of duties are
confined to the frontiers alone. The latter is to levy the tax
wherever industry is exercised; it consequently must comprehend,
under its inspection, all productive workmen, all the most useful
citizens of the state; and it cannot reach them, except by an
inquisition almost constantly destructive of security and
freedom. Tolls, in the last place, established at the gates of
towns, form the fourth class of duties on consumption. As the
most important department of the national exchange is that
between the industry of towns and the industry of the country,
tolls are destined to reach the latter, and to subject the goods
produced by agriculture to a proportionate tax, at the moment
when they come to be consumed by the inhabitants of towns.
In this manner, the establishment of taxes on consumption has
covered Europe with four hosts of clerks, inspectors, agents,
who, by incessantly struggling with each citizen about pecuniary
interests, have contributed to render authority odious to the
people, and accustomed men to elude the law, to violate truth, to
disobey, and to deceive. The more heavy and multiplied these
taxes are, the more rapidly will immorality make progress. Goods
destined for the consumption of the rich, presenting, in the same
bulk, a much greater value than goods consumed by the poor, offer
a much more powerful encouragement to smuggling; they have hence
been necessarily subjected to far lower duties, that fraud might
not altogether escape with them from taxation; and by pushing
things to extremes, the most unjust inequality has been
established among contributors; liberty has been encroached on by
vexatious inquisitions; the manufactures, the trade, even the
existence of those who labour and who should create every kind of
wealth, have been endangered. Those counties which have enjoyed
the highest prosperity are exactly those in which this
aggravation of indirect taxes threatens every kind of industry
with the most complete ruin.
Governments have not been contented with taxing revenues and
expenditure; they have gone forth to seek out all the acts of
civil life which might afford them an opportunity of asking
money. Some have established capitations, which, weighing equally
on the poor and the rich, force the man to pay who has nothing,
for whom society does nothing, equally with him who has too much;
for whom society lays out enormous expenses. Others have attacked
with considerable imposts, inheritances, sales, and all exchange
of property; though, in thus encroaching on capital, not on
revenue, they diminish the productive cause of wealth, nearly as
if tithes were levied on the seed, instead of being levied on the
crop. Others have established imposts on loans, by pledge and
judicial acts, on stamps, and a train of accidents which ought to
be taken as Symptoms of poverty, not of riches. Others, in fine,
by establishing lotteries, have profited by encouraging a ruinous
vice.
This review of the different kinds of taxation shows clearly,
that one of the most essential qualities which a nation can ask
in its government is economy. States, in the vigour lent them by
freedom, in the full enjoyment of all their advantages, give way
to all the dreams of ambition; they listen to all the suggestions
of pride, of jealousy, or of vengeance; under the pretext of
being on their guard against distant or imaginary dangers, they
rush headlong, with light hearts, into ruinous wars, and persist
in them with obstinacy; though the voice of humanity calls for
peace in vain, the superiority of their nation does not yet
appear sufficiently established, their enemy is not yet
sufficiently humbled; the work which they thought accomplished
has been overturned; it must be reestablished at any price.
Present resources, however, are exhausted, and recourse is had to
borrowing: credit is still entire; the national capitals are
drained away from commerce, and placed, one after another, at the
disposal of a minister, who dissipates them, and replaces them by
assignments on the future; and the passion which blinded men for
a few months, condemns their posterity to suffering for ages.
Perhaps no invention was ever more fatal to men than that of
public loans: none is yet enveloped with more illusions. The
passions excited by politics are so violent; the questions to be
decided by negotiations or by arms so important; all sacrifices
become so natural, when the prosperity, the existence, the honour
of all are at stake, that governments and the people, before
yielding, are to exhaust every resource to the very uttermost.
They will send out the last man to battle, they will expend their
last shilling, if they can possibly dispose of either; and they
will do this not alone for the safety of the people, but for any
war, any quarrel in which they happen to engage, because there is
no one in which their offended pride may not be confounded with
honour, in which they cannot honestly say what is true only in
extreme cases, that a nation had better cease to exist than exist
dishonoured.
If the possibility of making such preternatural exertions
could be furnished to nations, and reserved at the same time for
an extraordinary necessity, no doubt a great service would be
done to human society, which is shaken to its foundation every
time that one of its members is overthrown. But each mean of
defence becomes in its turn a mean of attack. The invention of
artillery, happy for society if it could have been employed only
in the defence of towns, has served to overthrow them: the
invention of standing armies has opposed discipline to
discipline, and talent to talent; the invention of conscriptions
has opposed all the youth of one nation to all the youth of
another; the invention of landsthurms and levees en masse, has
made even women and old men descend to the field of battle to
assist regular troops; the invention of loans has attacked and
defended the present generation, with all the hope and all the
labour of posterity. The strength of nations, though becoming
still more formidable, has continued still in same proportion.
The state, in danger, has not found deliverance more easily. but
humanity herself has been sacrificed, and, amid those gigantic
combats, it is she that must perish.
As, after those destructive expenses rendered possible by
loans, there remains an apparent wealth, which has been named the
public funds, and which figures as an immense capital, the
different portions of which constitute the fortunes of opulent
individuals, some have believed, or affected to believe, that
this dissipation of national capital was not so great an evil,
but rather a circulation, which caused wealth to spring up again
under another shape; and that mysterious advantages existed for
great states in this immaterial opulence, which was seen to pass
from hand to hand on the market of the public stocks.
No very powerful logic was needed, to persuade ministers of
the advantages arising from dissipation; stock-jobbers, of the
national profit attached to their commerce; state creditors, of
the importance of their rank in society; capitalists, eager to
lend, of the service they did to the public, by taking from it an
interest superior to that of trade. Thus all appeared amply
satisfied with regard to the unintelligible doctrine by which it
was pretended to demonstrate the advantage of public funds.
In place of following this subtle reasoning, we shall
endeavour to show that stocks are nothing else but the imaginary
capital, which represents that portion of the annual revenue set
apart for paying the debt. An equivalent capital has been
dissipated; it is this which gives name to the loan; but it is
not this which stocks represent, for this does not any where
exist. New wealth, however, must spring from labour and industry.
A yearly portion of this wealth is assigned beforehand to those
who have lent the wealth already destroyed; the loan will
abstract this portion from its producer, to bestow it on the
state creditor, according to the proportion between capital and
interest usual in the country: and an imaginary capital is
conceived to exist, equivalent to what would yield the annual
revenue which the creditors are to receive.
As, in lending to a merchant or a landed proprietor, we
acquire a right to part of the revenue which arises from the
merchant's trade, or from the proprietor's land, but diminish
their revenue by the precise sum which increases our own; so in
lending to government we acquire a right to that part of the
merchant's or proprietor's revenue, which government will seize
by taxation to pay us. We are enriched only as contributors are
impoverished. Private and public credit are a part of individual,
but not of national wealth; for nothing is wealth but what gives
a revenue, and credit gives none to the nation. If all public and
private debts were abolished in a day, there would be a frightful
overturning of property. one family would be ruined for the
profit of another, but the nation would neither be richer nor
poorer, and the one party would have gained what the other had
lost. This has not, however, in any case, been the result of
public bankruptcies; because governments, whilst suppressing
their debts, have maintained the taxation which belonged to their
creditors; or rather they have broken their faith to the latter,
and have continued notwithstanding to encroach on the property of
contributors.
A government which borrows, after leaving dissipated its
capital, makes posterity perpetually debtor in the clearest part
of the profit arising from its work. An overwhelming burden is
cast upon it, to bow down, one generation after another. Public
calamities may occur, trade may take a new direction, rivals may
supplant us. The reproduction which is sold beforehand may never
reappear; yet not withstanding we are loaded with a debt above
our strength, with a debt of hypothecating our future labour,
which we shall not perhaps be able to accomplish.
The necessity of paying this debt begets oppressive imposts
of one kind or another; all become equally fatal when too much
multiplied. They overwhelm industry, and destroy that
reproduction which is already sold beforehand. The more that it
has paid already, the less capable does the nation become of
paying farther. One part of the revenue was to spring from
agriculture - but taxation has ruined agriculture; another
proceeded from manufactures, but taxation has closed up those
establishments; another yet from trade, but taxation has banished
trade. The suffering continues to increase, all the resources to
diminish. The moment arrives at last, when a frightful bankruptcy
becomes inevitable. And doubts are entertained whether it should
not even be hastened, that the salvation of the state may yet be
attempted. There remains no chance to shield the whole subjects
of the state from ruin; but if the creditors are allowed to
perish first, perhaps the debtors will escape; if the debtors
perish from penury, with them will be extinguished the last hope
of the creditors, who must soon perish in their turn.
Chapter 7
Of Population
We have defined political economy, as being the investigation
of the means, by which the greatest number of men in a given
state may participate in the highest degree of physical
happiness, so far as it depends on government. Two elements,
indeed, must always be received in connexion by the legislature;
the increase of happiness in intensity, and the diffusion of it
among all classes of subjects. It is thus that political economy,
on a great scale, becomes the theory of beneficence; and that
every thing which does not in the long run concern the happiness
of men belongs not to this science.
The human race originating in a single family, has
multiplied, and spread itself by degrees over the globe; and much
time was of course required, before it could be adjusted to the
means of subsistence, which different parts of this globe are
capable of supplying. We see this work of nature repeated in new
counties, or in a colony established in a desert region. A state
which passes from barbarism to a higher stage of civilization,
cannot all on a sudden become covered with as many inhabitants as
it may comfortably support: as the earth has been wasted several
times; as the greater part of its provinces has been by turns
plunged into a state of desolation, to arise from it slowly
afterwards, we have often had the opportunity of witnessing this
spectacle of a growing population. We are accustomed to consider
it as the mark of prosperity and good government; and hence our
law and constitution all tend to favour this increase, though to
increase the symptoms of prosperity is very different from
increasing prosperity itself.
Nature has attended to the multiplication of races with a
kind of profusion. Although that of man is among the slowest in
its progress, it may increase, when all circumstances are
favourable, far more quickly than any of our observations
indicate. When every man has a great interest in bringing up a
family, and has the means of doing so; when all marry, and all as
young as nature permits; when they continue to have children till
the approaches of old age, their posterity increases so as very
quickly to occupy all the allotted space. In several counties, in
consequence of the social organization, not above a fourth part
of the individuals marry; the rest grow old in celibacy. Yet this
fourth is of itself sufficient to keep up the population at the
same level. If their brothers and sisters could also marry with
the same advantage, the population would be quadrupled in a
single generation.
Thus, every nation very soon arrives at the degree of
population which it can attain without changing its social
institutions. It soon arrives at counting as many individuals as
it can maintain with a revenue so limited, and so distributed. If
a great transient calamity, a war, a pestilence, a famine, have
left a great void in the population, should those events be
followed by a period of general security and comfort, this
renewing power of human generation is speedily developed; and an
observer is astonished to see how few years are required to
obliterate all traces of a scourge, which seemed to have
unpeopled the earth. But, on the other hand, so soon as this term
has been reached, a greater increase of the population is a
national calamity; the earth soon consumes those whom it cannot
feed. The more numerous births are, the more will mortality
display its ravages, to maintain constantly the same level; and
this mortality, the effect of misery and suffering, is preceded
by the lengthened punishments not of those who perish only, but
of those who have struggled with them for existence.
In every country, it is essential to know well those
different periods of increase, of stagnation and decline, in
order to adapt the laws, and all social institutions, to the
circumstances; and not, as has too frequently been done, to
hasten, with all our efforts, the destruction we ought most to
fear.
So long as a great part of the country is uncultivated as
land proper for liberally rewarding rural labour is covered only
with spontaneous production; as even the part under tillage is
imperfectly worked; as the soil is not rendered healthy, the
marshes drained, the hills protected against precipitations, the
fields defended against the ruinous force of nature; so long as
all this is not done merely for want of hands - it is desirable
for the happiness of agriculturists, and for that of the nation
living on their labour, that the class of cultivators should be
increased, and enabled to accomplish the task reserved for them.
So long as the objects produced by the industrious arts are
imperfectly supplied to the consumer, or at least as he cannot
procure them except by a sacrifice quite disproportionate to
their value; so long as he is constrained to furnish himself
coarsely by domestic industry, for want of opportunity to buy
furniture, effects, clothes, proper for his use; so long as his
enjoyments are restricted by the inconveniences of all the
utensils with which he is obliged to content himself, - it is
desirable that the manufacturing population increase; since, from
the need there is of such a population, it might evidently live
in comfort, and contribute to the enjoyment of other classes.
So long as all hands are in such a degree necessary for
agriculture, and manufactures, or trade which serves them, that
the guardian professions, equally useful to society, are badly
filled up - it is desirable that population continue to increase,
that so interior order, security of person and property, may be
better protected, health better attended to, the soul better
nourished, the mind more enlightened; and that society may be
externally defended with sufficient force, comprehending even the
rapid recruitment of a sea or land army, which consume
population.
This population, indeed, whenever it is required, will
quickly be replaced. But it is not enough that it be replaced, if
it cannot find the niche, to which it is destined. Sometimes a
fertile soil is in vain abundant, and remains uncultivated. There
is no chance of the most numerous population assembled in its
neighbourhood coming to profit by its resources. This soil has
become the property of a few families; it is declared indivisible
and unalienable; it will always pass to a single proprietor,
according to the order of primogeniture, without the capacity
either to be subjected to an emphyteutic lease, or burdened with
a mortgage. The proprietor has not the capital necessary for its
cultivation; he can give no security to such as have this
capital, that will engage them to employ it in his land. Thus the
idle population of Rome in vain calls for labour; the waste
Campagna di Roma in vain calls for labourers; the social
organization is bad; and so long as this shall remain unchanged,
the day-labourer will perish from penury, on the surface of
fields which, for want of culture, are returning to their wild
state; and the population, far from increasing, will diminish.
On the same principle in manufactures, the rich proprietors
of Poland will in vain require all the produce of luxury; the bad
condition of the roads, prohibiting every distant transport, will
in vain present superior advantages to national industry;
oppression and servitude destroy all energy, all spirit of
enterprise in the lower class. Elsewhere ruinous monopolies,
absurd privileges, affrighting advances, ignorance, barbarity,
and want of security, will render the progress of manufactures
impossible; no capital will be accumulated to animate them. In
those cases, to increase the population will not increase
industry. The births will in vain be doubled, be quadrupled,
during a certain number of years; they will not afford an
additional workman, they will only be followed by a
proportionably quicker mortality. The social organization is bad;
so long as this shall remain unchanged, population cannot
increase.
The guardian population is fed as well as recruited by the
other classes. It is not sufficient that many children are born;
unless their parents enjoy a certain degree of opulence, they can
never bring them up to the age of men; the prince can never make
soldiers of them. In this case, wars by land or sea will devour
the population; whilst they employ only its superfluity, the
social organization is good.
The population is always measured, in the long run, by the
demand for labour. Wherever labour is required, and a sufficient
wage offered, the workmen will arise to earn it. The population,
with its expansive force, will occupy the place which is found
vacant. Subsistence will also arise for the workmen, or in case
of need, be imported. The same demand which calls a man into
existence, will likeWise recompense the agricultural labour which
provides him with food. If the demand for labour cease, the
workman will perish, yet not without a struggle, in which not he
alone will suffer, but all his brethren and his rivals. The
subsistence which enabled him to live, and which henceforth he
cannot pay for, and cannot demand, will, in its turn, cease to be
produced. Thus national happiness rests on the demand for labour,
but on a regular and perpetual demand. For, on the contrary, a
demand which is intermittent, after having formed workmen,
condemns them to suffering and death: it would be far better if
they never had existed.
We have seen that the demand for labour, the cause of
production, must be proportional to revenue which supports
consumption; that this revenue, in its turn, originates in the
national wealth, which wealth is formed and augmented by labour.
Thus, in political economy, all things are linked together, we
move constantly in a circle; since each effect becomes a cause in
its turn. Yet all things are progressive, provided that each
movement is adjusted to the rest; but all stops, all retrogrades,
whenever one of the movements which ought to be combined is
disordered. According to the natural march of things, an
augmentation of wealth will produce an augmentation of revenue;
from this will arise an increase of consumption, next an increase
of labour for reproduction, and therewith of population; and,
finally, this new labour will, in its turn, increase the national
wealth. But if, by unreasonable measures, any one of those
operations is hastened without regard to all the rest, the whole
system is deranged, and the poor are weighed down with suffering,
instead of the happiness which was anticipated for them.
The object of society is not fulfilled, so long as the
country occupied by this society, presents means of supporting a
new population, of enabling it to live in happiness and
abundance, whilst yet those means are not resorted to. The
multiplication of happiness over the earth, is the object of
Providence; it is stamped in all his works, and the duty of men
in their human society is to co-operate in it.
The government which, by oppression of its subjects, by its
contempt for justice and order, by the shackles it puts on
agriculture and industry, condemns fertile counties to be
deserts, sins not against its own subjects alone; its tyranny is
a crime against human society, on the whole of which it inflicts
suffering; it weakens its rights over the country occupied by it,
and as it troubles the enjoyments of all other states, it gives
to all others the right of controlling it. All men are mutually
necessary to each other. Europe has a double need of the
subsistence which it might procure from Barbary, if this
magnificent shore of Africa were given back to civilization, and
from the consumers we should soon find there. The institution of
property is the result of social conventions. In a society
subjected to laws and a regulating government, the interest of
each may be implicitly relied on for producing the advantage of
all, because the aberrations of this private interest are, in
every case of need, limited by public authority. But, in the
great human society formed among independent nations, there is no
law or general government to repress the passions of each
sovereign: besides, the interest of those sovereigns is not
necessarily conformable to that of their subjects; or, to speak
more correctly, the one is contrary to the other, whenever the
object of the rulers is to maintain their tyranny. Thus respect
for the pretended right of properly claimed by each government
over its territory, is not referrible to the right of private
property, and, besides, it cannot be reciprocal. The same
circumstances which cause a tyrannical government to impede its
own civilization, render it equally incapable of respecting that
of its neighbours, and submitting to the laws of nations.
But whilst more than three quarters of the habitable globe
are, by the faults of their governments, deprived of the
inhabitants they should support, we, at the present day, in
almost the whole of Europe, experience the opposite calamity,
that of not being able to maintain a superabundant population,
which surpasses the proportion of labour required, and which,
before dying of poverty, will diffuse its sufferings over the
whole class of such as live by the labour of their hands. For our
part, we owe this calamity to the imprudent zeal of our
governments. With us, religious instruction, legislation, social
organization, every thing has tended to produce a population, the
existence of which was not provided for beforehand. The labour
was not adjusted to the number of men; and, frequently, the same
zeal with which it was attempted to multiply the number of
births, was afterwards employed, in all arts, to diminish the
required number of hands. The proportion which should subsist in
the progress of the different departments of society has been
broken, and the suffering has become universal.
Mr Malthus, the first writer who awakened public attention to
this calamity under which nations have long suffered, without
knowing it, whilst he gave an alarm to legislators, did not reach
the true principles which he seemed on the road to find. On
reading his writings, one is stuck at once with an essential
error in his reasoning, and with the importance of the facts to
which he appeals. Such confusion, in a matter to which the
happiness of man is attached, may produce the most fatal
consequences. By rigorously applying principles deficient in
accuracy, the most grievous errors may be committed; and if, on
the other hand, the error is discovered, there is a risk of
simultaneously rejecting both the observations and the precepts.
Mr Malthus established as a principle that the population of
every country is limited by the quantity of subsistence which
that country can furnish. This proposition is true only when
applied to the whole terrestial globe, or to a country which has
no possibility of trade; in all other cases, foreign trade
modifies it; and, farther, which is more important, this
proposition is but abstractly true, - true in a manner
inapplicable to political economy. Population has never reached
the limit of subsistence, and probably it never will. Long before
the population can be arrested by the inability of the country to
produce more food, it is arrested by the inability of the
population to purchase that food, or to labour in producing it.
The whole population of a state, says Mr Malthus, may be
doubled every twenty-five years; it would thus follow a
geometrical progression: but the labour employed to meliorate a
soil, already in culture, can add to its produce nothing but
quantities continually decreasing. Admitting that, during the
first twenty-five years, the produce of land has been doubled,
during the second we shall scarcely succeed in compelling it to
produce a half more, then a third more, then a fourth. Thus the
progress of subsistence will not follow the geometrical, but the
arithmetical progression; and, in the course of two centuries,
whilst the population increases, as the numbers, 1. 2, 4, 8, 16,
32, 64, 128, subsistence will increase not faster than the
numbers, 1, 2, 3, 4, 5, 6, 7, 8.
This reasoning, which serves as a basis to the system of Mr.
Malthus, and to which he incessantly appeals, through the whole
course of his book, is completely sophistical. It opposes the
possible increase of the human population, considered abstractly,
and without regarding circumstances, to the positive increase of
animals and vegetables in a confined place, under circumstances
more and more unfavourable. They ought not thus to be compared.
Abstractly, the multiplication of food follows a geometrical
progression, no less than the multiplication of men. It follows
it only in a much more rapid manner. In a given space and time,
this progression is not followed any more by the one species than
the other. Population is arrested first, and arrests subsistence
in its turn; when the obstacle is removed, both begin again to
increase, till they reach a new limit, equally common to both;
and the history of the universe has never yet presented the
example of a country in which the multiplication of food could
not be more rapid than that of the co-existent population.
In a state absolutely savage, men live on the produce of
hunting and fishing. The fish and the game are multiplied like
man, in a geometrical progression, but much more rapid than the
one he follows. Man, it is true, hinders their reproduction by
destroying them; but, on the other hand, they arrest his; for it
is not certainly among nations of hunters that the population is
doubled every twenty-five years; and whenever this destruction is
suspended, the reproduction of game will be much more rapid than
that of men.
The progress of civilization substitutes the pastoral life
for a life of hunting; and the natural produce of the ground,
better managed, is sufficient for a much more numerous population
of men and of animals. The deserts, which scarcely support five
hundred Cherokee hunters, would be sufficient for ten thousand
Tartar shepherds, with all their flocks; the multiplication of
the latter is always much more rapid than that of men; whilst the
production of a man requires twenty-five years, that of an ox
requires but five, of a sheep but two, of a hog but one. The
number of oxen may be doubled in six years, that of sheep in
three, that of hogs may be rendered ten times as great in two
years. Whenever a shepherd gains possession of a country formerly
abandoned to hunting, the multiplication of his flocks will
greatly precede that of his family; when, afterwards, one of the
two is arrested, the other will be so too.
But when civilization makes a new step, pastoral nations
abandon their flocks for agriculture; and, instead of trusting to
the natural productions of the vegetable kingdom, they produce
and multiply them by their labours. It is calculated that thirty
families may live on the corn produced by a piece of ground,
which would have supported only a single family by its produce in
cattle. At the time, therefore, when a nation passes from the
pastoral to the agricultural state, it in some sense acquires a
country thirty times as large as the one it formerly occupied. If
the whole of this country is not cultivated, if even in the most
civilized kingdoms, there remains a vast extent nf fertile land
still employed in unprofitable pasturage, it is an evident proof
that other causes than want of subsistence prevent the
development of population.
The multiplication of vegetables follows a geometrical
progression much more rapid still than the multiplication of
cattle. In common tillage, corn increases five-fold in the course
of a year; potatoes ten-fold in the same space of time. The
latter vegetable, to produce a given quantity of food, scarcely
requires the tenth part of the ground which corn would occupy.
Yet even in the most populous countries, men are very far from
having planted all their corn fields with potatoes; from having
sown all their pasturages with corn; from having converted into
pasturage all their woods, all their deserts abandoned to
hunting. Those things are a fund of reserve remaining to every
nation; and, by means of them, if a new demand for labour should
suddenly cause the population to increase as rapidly as the
nature of man can permit, the multiplication of food would still
precede it.
The demand for labour which the capital of a country can pay,
and not the quantity of food which that country can produce,
regulates the population. In political economy, nothing is
reckoned a demand but what is accompanied with a sufficient
compensation for the thing demanded. If no fault has been
committed on the part of government, if no dangerous prejudice
has been diffused among the people, very few men will think of
marrying, and burdening their hands with the subsistence of
individuals unable to procure it themselves, till they have first
acquired an establishment. But whenever a new demand for labour
raises their wages, and thus increases their revenue, they hasten
to satisfy one of the first laws of nature, and seek in marriage
a new source of happiness. If the rise of wages was but
momentary; if, for example, the favours granted by government
suddenly give a great development to a species of manufacture,
which, after its commencement, cannot be maintained, the workmen,
whose remuneration was double during some time, will all have
married to profit by their opulence; and then, at the moment when
their trade declines, families disproportionate to the actual
demand of labour will be plunged into the most dreadful
wretchedness.
It is those variations in the demand for labour, this sort of
revolution so frequent in the lives of poor artisans, that gives
to the state a superabundant population. Already brought into the
world, that population finds no longer any room to exist there;
it is always ready to be satisfied with the lowest terms on which
it may be permitted to live. There is no condition so hard that
men are not found ready to engage in it voluntarily. In some
trades, the workmen are obliged to live in mud, exposed to
continual nausea; in others, the labour engenders painful and
inevitable maladies; several stupify the senses, degrade the body
and the soul; several employ none but children, and after
introducing into life, abandon to a horrible indigence the being
they have formed. There are callings, in fine, which public
opinion brands with infamy; there are some which deserve this
condemnation. Yet the ranks are always full; and a miserable
wage, scarce sufficient for existence, induces men, to undergo so
many evils. The reason is, society does not leave them any
choice; they are compelled to be contented with this cruel lot or
not to live. The duty of governments to succour so much
wretchedness cannot be doubtful, for they are almost always the
cause of this wretched population's being created; but, at the
same time they ought not to forget that it is their part to save
from indigence the miserable creatures already in existence,
though at the same time discouraging them from perpetuating their
race. Assistance given to the poor has often done the contrary.
Religious instruction has almost always strongly contributed
to destroy the equilibrium between the population, and the demand
for labour which is to give it subsistence. When questions of
moral polity are introduced in a religious system, it almost
constantly happens, that the cause of the precept is absolutely
separated from the precept itself; and a rule, which should be
modified by circumstances, becomes an invariable law. Religions
began with the origin of the human race; and therefore at a time
when the rapid progress of population was every where desirable;
their principles have not yet changed, now when the unlimited
increase of families has given birth only to beings, of necessity
condemned to physical suffering or moral degradation.
A Chinese knows no greater misfortune, no deeper humiliation,
than not to leave sons behind him to perform the funeral honours
at his death. In almost all other creeds the indefinite increase
of families has ever been represented as a blessing of heaven. On
the other hand, whilst religion repressed irregularity of morals,
it attached all morality of conduct to marriage, and washed away,
by the nuptial benediction alone, whatever, was reprehensible in
the imprudence of him who inconsiderately contracted the bonds of
paternity. Yet, how important soever purity of morals may be, the
duties of a father towards those whom he brings into existence
are of a still higher order. Children born but for wretchedness,
are also born but for vice. The happiness and the virtue of
innocent and defenceless beings are thus sacrificed beforehand,
to satisfy the passions of a day. The ardour of casuists in
preaching up marriage to correct a fault; the imprudence with
which they recommend husbands to shut their eyes upon the future,
to entrust the fate of their children to providence; the
ignorance of social order, which has induced them to erase
chastity from the number of virtues proper in marriage, are
causes which have been incessantly active in destroying the
proportion which naturally would have established itself between
the population and its means of existing.
The Catholic faith has sometimes gained credit for its
religious vows; which by forbidding marriage to a certain number
of individuals, seemed to offer some opposition to an unlimited
multiplication of the human species. But those who consider it
thus, certainly do not understand another very important part of
the legislation of casuists, with regard to all that they have
named the duties of husbands. Considering marriage as solely
destined for multiplication, they have made a sin of the very
virtues which they enforce on single persons. This morality is
enforced by every confessor on every father and mother of a
family. The effects of it are powerfully felt in the social
organization of Catholic countries. They are met with even in
reformed churches.
When fatal prejudices are not honoured; when a system of
morality contrary to our true duties towards others, and above
all towards those indebted to us for life, is not taught in the
name of the most sacred authority, no wise man will marry till he
is in a condition that affords him sure means of living, no
father of a family will have more children than he can
conveniently maintain. The latter expects that his children will
be satisfied with the lot in which he has lived; hence he will
wish the rising generation exactly to represent that which is
departing; he will wish that a son and a daughter arrived at the
age of marriage, should fill the place of his father and his
mother; that his children's children should fill his place and
his wife's, in their turn; his daughter will find in another
house exactly the lot which he will give to the daughter of
another house in his own; and the income which satisfied the
fathers will satisfy the children.
When once this family is formed, justice and humanity require
that they submit to the same constraints which single people
undergo. On considering how small is the number of natural
children in every country, it ought to be admitted that this
constraint is sufficiently effectual. In a country where
population cannot increase, where new places do not exist for new
establishments, the father who has eight children should reckon
either that six of his children will die young, or that three
contemporary males and their contemporary females; or in the
following generation three of his sons and three of his daughters
will not marry on his account. There is no less injustice in the
second calculation than cruelty in the first. If marriage is
sacred; if it is one great means of attaching men to virtue, and
recompensing the chagrins of declining years, by the growing
hopes of allowing an honourable old age to succeed an active
youth, it is not because this institution renders lawful the
pleasures of sense, but because it imposes new duties on the
father of a family, and returns him the sweetest recompense in
the ties of husband and father. Religious morality ought
therefore to teach men, that marriage is made for all citizens
equally; that it is the object towards which they should all
direct their efforts; but that this object has not been attained
except so far as they are able to fulfil their duties towards the
beings whom they call into existence: and after obtaining the
happiness of being fathers, after renewing their families, and
giving this stay and hope to their declining years, they are no
less obliged to live chastely with their wives, than single
persons with such as do not belong to them.
Self-interest powerfully warns men against this indefinite
multiplication of their families, to which they have been invited
by so fatal a religious error, and no one ought to be disquieted
if this order is observed remissly. In general at least three
births are required to give two such individuals as arrive at the
age of marriage; and the niches of population are not so exactly
formed, that they cannot by turns admit a little more and a
little less. Only government ought to awaken the prudence of
citizens deficient in it, and never to deceive them by hopes of
an independent lot, when this illusory establishment shall leave
them exposed to misery, suffering, and death.
When peasants are proprietors, the agricultural population
stops of itself, when it has brought about a division of the
land, such that each family is invited to labour, and may live in
comfortable circumstances. This is the case in almost all the
Swiss cantons, which follow nothing but agriculture. When two or
more sons are found in one family, the younger do not marry till
they can find wives who bring them some property. Till then, they
work day-labour and live by means of it. But among
peasant-cultivators, the trade of day-labour does not afford a
rank; and the workman who has nothing but his limbs, can rarely
find a father imprudent enough to give him his daughter.
When the land, instead of being cultivated by its
proprietors, is cultivated by farmers, metayers, day-labourers,
the condition of the latter classes becomes more precarious, and
their multiplication is not so necessarily adjusted to the demand
for their labour. They are far worse informed than the
peasant-proprietor, and yet they are called to perform a much
more complicated calculation. Living under the risk of being
dismissed at a day' s notice from the land they till, it is less
a question with them what this land will give, than what is their
chance of being employed elsewhere. They calculate probabilities
in place of certainties, and commit themselves to fortune with
regard to what they cannot investigate. They depend on being
happy; they marry much younger; they bring into the world many
more children, precisely because they know less distinctly how
those children are to be established.
Thus metayers, day-labourers. all peasants depending on a
master, being more imperfectly able to judge of their situation
by themselves, ought to be guided and protected by government.
Landed proprietors wield all the force of monopoly against them;
whilst day-labourers, acting in competition with each other, are
finally reduced to work for the most wretched subsistence. Those
measures are wise, therefore, which have been adopted by
legislators to fix the minimum share that should fall to each
peasant. It would, in general, be a beneficent law which should
permit no division of a metairie below a certain limit, no
reduction below a half on the metayer's part. It is a beneficent
law which has fixed the peasant's lot in Austria; a law which
should invariably fix the Russian peasant's capitation to his
landlord, would be equivalent to an emancipation from serfage,
and free from all the convulsions of such a step. The Russian
nation could not, perhaps, receive a greater benefit from its
government. The statute of Elizabeth, in fine, was wise in
prohibiting a cottage from being built without at least four
acres of land being allotted to it. Had this law been executed in
England and Ireland, no marriage could have happened among
day-labourers without a cottage to shelter the family, no
cottager would have been reduced to the last degree of penury.
The industrious population which inhabit towns have still
fewer data than those of the country, for calculating the lot of
the succeeding generation. The workman knows only that he has
lived by his labour; he naturally believes that his children will
do so likewise. How can he judge of the extent of the market, or
the general demand for labour in his country, whilst the master
who employs him is incessantly mistaken on these points?
Accordingly, this class, more dependent than any other on chances
of every kind for its subsistence, is exactly the class which
calculates those chances least in the formation of a family. They
are the people who marry soonest, produce most children, and
consequently lose most: but they do not lose their children, till
after being themselves exposed to a competition which deprives
them successively of all the sweets of life.
At the time when all towns were distributed into bodies of
tradesmen, when a calling could not be exercised till the
applicant had been united to a corporation, a workman never
married till after he had been passed master. A reception into
the trade gave him the certainty of being able to maintain his
family; an excessive competition did not expose the great mass of
the population to the danger of dying from hunger. Thus, all the
institutions created in the republics of the middle ages, and
reproduced in Queen Elizabeth's statute of apprenticeship, though
keenly attacked by Adam Smith, for establishing a monopoly
contrary to the consumer's interest, may be defended, not in
regard to the increase of riches, but as forming a necessary
obstacle to the immoderate increase of population.
Yet because the system we follow has made us experience a
calamity, we ought not to imagine that no escape is to be found,
except by rushing into the opposite extreme. It is not by the
suppression of corporations alone, that we have
disproportionately increased the manufacturing population. It is
much more by the inordinate encouragement which all governments,
at the same time, have given to production without attending to
consumption. We have already pointed out the results of this
imprudent struggle, in regard to the increase of wealth. They
have been still more disastrous in producing and supporting with
deceitful hopes a population, which has afterwards been abandoned
to all the horrors of want.
A state ought, doubtless, to receive with gratitude whatever
new industry the wants of consumers may develop but it also ought
to allow the industry which is quitting it to depart, without any
effort to the contrary. When the profits of a manufacture
diminish, new workmen do not engage in it; former workmen
withdraw; and after some years of suffering, too long and too
cruel, by any mode of treatment, the level is again established.
But if the favours of government keep up the staggering
manufacture; if, trying to save it, government offers bounties
for the discovery of any machine which shall spare manual labour,
it will prolong suffering, and save the manufacturer only at the
expense of those whom that manufacturer should support.
The guardian population presents the same species of
suffering in another rank of society. War multiplies the
commissions of officers in the army and navy; the complicacy of
administration multiplies the places of judges and civil agents
of all kinds. Religious zeal multiplies the places for pastors.
All of them live on pensions with a certain degree of opulence;
none of them knows, or is able to insure the fund which affords
him subsistence. They reckon on ushering their children into the
same career with themselves; they bring them up, multiply their
families in proportion to their actual opulence, and blindly
repose on the future. Their pension, however, finishes with their
life; and at death they leave their children in a state of
indigence, the suffering of which is farther aggravated by the
possession of a liberal education. The laws which obstruct the
marriage of officers, judges, clergymen, and generally of all
such as live on pensions, how hard soever those law may appear at
their first establishment, are justifiable, because they save
from poverty the class to which its torments would be most
piercing.
But an inordinate increase of population is not the only
cause of this national suffering. The demand for labour may
decrease, and the population continue stationary. Consumption may
be arrested, revenues dissipated, capital destroyed, and the
number of hands formerly occupied may no longer be able to find a
sufficient employment. The population immediately follow the
revolution of the capitals destined to support it. As
day-labourers are more eager to receive even the smallest wage,
than merchants to employ their money, the former are laid under
conditions more and more hard, as the demand on the capital
diminishes; and they conclude by contenting themselves with so
miserable a remuneration, as is scarcely sufficient to maintain
them alive. No enjoyment is any longer attached to the existence
of this unhappy class; hunger and suffering stifle in them all
the moral affections. When every hour is a struggle for life, all
passions are concentrated in selfishness; each forgets the pain
of others in what himself suffers; the sentiments of nature are
blunted; a constant, obstinate, uniform labour, debases all the
faculties. One blushes for the human species, to see how low on
the scale of degradation it can descend; how much beneath the
condition of animals it can voluntarily submit to maintain life;
and, notwithstanding all the benefits of social order,
notwithstanding the advantages which man has gained from the
arts, one is sometimes tempted to execrate the division of
labour, and the invention of manufactures on beholding to what
extremes of wretchedness they have reduced beings created equal
with ourselves.
The misery of the savage hunter, who dies so frequently of
hunger, is not equal to that of millions of families, whom a
manufacturer sometimes dismisses; because at least there remains
to the former, all the energy, and all the intelligence, which he
has put to proof during all his life. When he dies for want of
finding game, he yields to a necessity which nature herself
presents, and to which he knew, from the beginning, he must
submit, as to sickness, or to old age. But the artisan, dismissed
from his workshop, with his wife and children, has beforehand
lost the strength of his soul and his body; he is still
surrounded with riches; he still sees beside him, at every step,
the food which he requires; and if society refuses him the labour
by which he offers, till his last moment, to purchase bread, it
is men, not nature, that he blames.
Even when persons do not actually die of hunger; even when
the aids of charity are eagerly administered to all indigent
families, discouragement and suffering produce their cruel
effects on the poor, the diseases of the soul are communicated to
the body, epidemics are multiplied, children die in a few months
after their birth, and the suppression of labour causes more
cruel ravages than the cruellest war: besides, fatal habits,
either of mendicity or idleness, take root in the population;
another course is given to trade, another direction to fashion,
and even after death has cleared the ranks of workmen, those who
remain are no longer in a condition to support the competition of
foreigners.
The causes of diminution in the demand for labour, often
belong to polity, properly so called, rather than to political
economy. There is, perhaps, none more efficacious than the loss
or diminution of liberty, When a nation begins to alienate this
precious possession, each citizen thinks himself less secure of
his fortune, of the fruits of his labour; each abates something
of the activity of his mind, and his spirit of industry. The
virtues which accompany labour, - sobriety, constancy, economy -
give place to the vices of idleness, to intemperance,
dissipation, and forgetfulness of the future. Trade, industry,
activity, are regarded with contempt, in a state where the people
are nothing, whilst all distinction, all honours, are reserved
for noble indolence. Favour, intrigue, flattery, and all the arts
of courtiers, which debase the soul, are roads to fortune, much
more sure and rapid than strength of character, bold and
enterprising activity, or a spirit of speculation. Intriguers are
multiplied daily; they regard with contempt those who follow the
only honourable path to fortune, that in which none makes
progress except by his merit or his labour.
One cause of depopulation is, however, presented, which lies
within the narrowest range of political economy. The progress of
the arts, the progress of industry, and hence even that of wealth
and prosperity, discover economical methods of producing all the
fruits of labour, by employing a smaller number of workmen.
Animals are substituted for men in almost all the details of
agriculture; and machines are substituted for men in all the
operations of manufactures. So long as a nation finds within its
reach a market sufficiently extensive to secure for all its
productions a prompt and advantageous circulation, each of those
discoveries is an advantage, because, instead of diminishing the
number of workmen, it augments the mass of labour and its
produce. A nation which happens to originate discoveries,
succeeds, for a long time, in extending its market in proportion
to the number of hands set free by every new invention. It
immediately employs them in augmenting the produce, which the
discovery promises to furnish at a cheaper rate. But a period
arrives at last, when the whole civilized world is but one
market, and when new customers cannot be found in new nations.
The demand of the universal market is then a precise quantity,
which the different industrious nations dispute with each other;
if one furnish more, another must furnish less. The total sale
can only be increased by the progress of general opulence, or
because conveniences, formerly confined to the rich, are brought
within the reach of the poor.
The invention of the stocking frame, by means of which one
man does as much work as a hundred did before, was a benefit for
humanity, only because, at the same time, the progress of
civilization, of population, and of wealth, increased the number
of consumers. New counties adopted the customs of Europe; and
this article of dress, formerly reserved for the rich, has now
descended to the poorest classes. But if, at the present day,
some new discovery should enable us, by a single stocking-frame,
to do the work which ten years ago was done by a hundred, this
discovery would be a national misfortune; for the number of
consumers can scarcely increase, and it would then be the number
of producers which would be diminished.
This example may show us the general rule: Whenever a
discovery, economizing labour, brings within the reach of a
poorer class what was previously confined to the rich, it extends
the market; and whilst benefiting undertakers, and poor
consumers, it does no harm to workmen. But when the discovery
cannot increase the number of consumers, though it serves them at
a cheaper rate, either because they are already all furnished, or
because the thing produced can never be useful to them, however
low it may fall, - the discovery becomes a human calamity;
because it is advantageous but to a certain manufacturer, and
that only at the expense of his brethren; or it benefits a single
nation, and that only at the expense of others. This national
benefit, if purchased at the expense of wretchedness and famine
to foreign artisans, would not in itself be much worth coveting;
it is, besides, very far from being certain. From the progress of
communication between different states, from the skill of
manufacturers, a discovery in one country is imitated in every
other before the former has gained any great profit from it.
It will doubtless be said, that whoever introduces a saving
in any article of his consumption, preserving still the same
revenue, will consume what he saves from the fall of price in
such and such an article, by a new expenditure, for which he will
put in requisition a new labour. But there never will be any
proportion between this new demand and the labour suspended on
account of it.
On one hand, consumers make use of goods a little finer, a
little prettier, at the same price. The clothes with which the
poor workman is dressed, are a little superior in quality, are
really worth a little more than those which covered his father,
at the expense of the same part of his wages. But himself does
not perceive this advantage. Decency, which according to this
station, he is obliged to consult, leaves him no choice; he must
dress like his equals, without finding more enjoyment; he makes
no saving in this article, he cannot apply it to any other
expense.
On the other hand, the price of goods is not always
established in direct proportion to the labour they require, but
in a very complicated proportion subsisting between this annual
labour, the circulating capital, and a primary, unrenewed labour,
consumed in building the manufactory, constructing the machinery
with expensive and often foreign materials. Hence, even when a
hundred workmen are dismissed, that the work may be done with one
by means of machinery,the goods are not reduced to the hundredth
part of their price. The stocking-frame economizes work nearly in
this proportion, yet it scarcely produces stockings ten per cent.
cheaper than those made with the needle. Notwithstanding the
invention of large mills for spinning wool, silk, cotton, women
continue to be employed in spinning with the wheel, or even with
the distaff; a certain proof that the saving does not exceed ten
per cent. The same observation may be extended to all improved
manufactures: they have never diminished the price of their
produce, except in arithmetical progression, while they have
suspended workmanship in geometrical progression.
Let us compare this saving in workmanship with the saving in
price, according to the most simple calculation on the commonest
manufacture. A hundred thousand women, who knit with the needle
each a hundred pair of stockings annually, produce ten million
pairs; which, at 5s. a-piece, would sell at 2,500,000 l.: the raw
material is worth a fifth of this. There remains 2,000,000 to
distribute among 100,000 workmen, or 20 l. a-head.
The same work is done at present on the frame by 1000
workmen, and comes in ten per cent. cheaper, at 4s. 6d. a pair,
or, 2,250,000 l. In all the nation therefore saves 250,000 l. If
employed solely in workmanship, this sum would be sufficient to
maintain 12,500 of the workers who have been dismissed. But this
is not what happens; the consumer, accustomed to buy stockings at
5s. a pair, pays still the same price; but, by reason of the
progress of the art, he merely wears them a little finer. This
progress in his luxury gives subsistence to a tenth more stocking
manufactures, that is to a hundred more; to these add still
farther a hundred workmen employed in repairing the machines, or
constructing new ones, and you have in all 1200 workmen living on
the sum which supported 100,000.
The same calculation is applicable to all improved
manufactures; for the manufacturer, in adopting a new machine,
and dismissing his workmen, never troubles himself with inquiring
whether he shall make a profit equal to the diminution of
workmanship, but merely whether he shall be enabled to sell a
little cheaper than his rivals. All the workmen of England would
be turned to the street, if the manufacturers could employ steam
engines in their place, with a saving of five per cent.
Besides, the improvement of machinery, and the economy of
human labour, contribute immediately to diminish the number of
national consumers; for all the ruined workmen were consumers. In
the country. the introduction of the large farming system has
banished from Great Britain the class of peasant farmers, who
laboured themselves, and yet enjoyed an honest plenty. The
population has been considerably diminished, but its consumption
is reduced still farther than its number. The hinds perform all
sorts of field labour, are limited to the scantiest necessaries,
and give not nearly so much encouragement to the industry of
towns as the rich peasants gave before.
A similar change has taken place in the population of towns.
Discoveries in the mechanical arts have always the remote result
of concentrating industry within the hands of a smaller number of
richer merchants. They enable men to perform with an expensive
machine, that is to say, with great capital, what was formerly
performed with a great labour. They discover the economy which
exists in management on a great scale, the division of operation,
the employment common to a great number of men at once, of light,
fuel, and all the powers of nature. Thus small merchants, small
manufacturers disappear; and our great undertaker supplies the
place of hundreds, who, all together, perhaps, were not as rich
as he. All together were, however, better consumers than he. His
expensive luxury gives far less encouragement to industry than
the honest plenty of a hundred households, of which his household
supplies the place.
As even new demands made manufactures prosper, the number of
labourers, in spite of the augmented powers of labour, increases
likewise; and such as were dismissed from the country found still
an establishment in manufacturing towns, the population of which
continued to increase. But now when at last the market of the
universe has been found sufficiently provided for, and new
reductions of workmen have occurred; when hinds have been
dismissed from the fields, spinners from the manufactories of
cotton, weavers from those of cloth; when each day a new machine
supplies the place of several families, whilst no new demand
offers them an occupation or a livelihood; distress has reached
its height, and one might begin to regret the progress of this
civilization, which, by collecting a greater number of
individuals in the same space of ground, has but multiplied their
wretchedness, whilst in deserts it could at least but reach a
small number of victims. One might also regret that governments
have studied too late, and neglected too constantly the precepts
of a science, which, teaching the origin of national prosperity,
points out beforehand its danger, and the causes of its
destruction.